The world economy faces serious challenges in sustaining the
strong economic growth of the last few years in 2008, the United
Nations said in World Economic Situation and Prospects 2008
released Wednesday in New York.
The baseline forecast of the United Nations is for world
economic growth to moderate to 3.4 percent this year, following the
trend line down from 3.9 percent in 2006 and 3.7 percent in
2007.
But there is a clear and present danger of the world economy
coming to a near standstill, the annual report warned.
In the second half of 2007, the bursting of the housing market
bubble in the United States and the unfolding credit crisis have
induced uncertainty across global financial markets. This together
with the decline of the U.S. dollar and the unresolved problem of
the large global imbalances could combine to further drag world
output down.
To prevent this from happening, the United Nations advised
concerted international policy action to address the global
imbalances and calm currency markets.
During 2007, world economic growth was robust and notably
broad-based. More than 100 economies achieved 3 percent growth of
per capita output or more.
Developing country growth averaged nearly 7 percent. Remarkably,
economic growth in Africa strengthened in 2007 to near 6 percent,
and in the baseline scenario this pace is expected to accelerate to
over 6 percent in 2008. However, this economic fortune may reverse.
The major uncertainty for 2008 now emanates from the U.S.
economy.
A further slowdown in the world's major economy will hit many of
the poor nations hard, as it will slow world trade and put an end
to the boom in commodity prices that benefited them over the past
years, said the report.
The ongoing housing downturn in the United States became much
more serious in the third quarter of 2007, with the meltdown of
sub-prime mortgages triggering a full-scale credit crunch that
reverberated throughout the global financial system.
Central banks of the major economies have adopted various
measures to attenuate financial stress. But these actions do not
address the root causes of huge imbalances between financial
surplus nations, such as China, Japan and the major oil producers,
and the deficit countries, the United States in particular.
These imbalances need to be addressed, the United Nations
suggested, through economic stimulus in the surplus countries to
offset the effects of demand deflation in the United States.
The annual report is a joint product of U.N. Department of
Economic and Social Affairs, U.N. Conference on Trade and
Development and the five U.N. regional commissions. It provides an
overview of recent global economic performance and short-term
prospects for the world economy and of some key global economic
policy and development issues.
(Xinhua News Agency January 10, 2008)
