World economy will shrink further says UN

The United Nations Department of Economic and Social Affairs (DESA) downgraded its economic forecast for 2009, claiming a further pessimistic decline in the world economy by 2.6 percent —0.5 percent below what was originally predicted. Developing countries are hardest hit by the crisis.

The launch today of the mid-year report entitled: World Economic Situation and Prospects 2009-2010(WESP) rounds up a half year and claims “The failure of the international community to get its act together at the international level contributed to this steady decline.”

Robert Vos, who authored the report said “nearly the whole world has ended up in recession.” He also underscored that unemployment is rising and recovery will take much longer. “Poverty reduction will be greatly slowed down.”

Vos said credit lending and loans in financial markets have tightened economic tensions and world trade growth is collapsing in countries like China where trade has fallen by one-quarter as compared to last year.

“Full recovery is uncertain” added Vos. “But we hope there will be some recovery in 2010.”

In the developed countries the US economy dropped 3.5 percent, Japan by 7.1 percent, the European Union by 3.7 percent and the Baltic states by 1.7 percent.

The mid year report states primary exporters of oil and net food are holding steady but suffering mainly from declines in exports. South Africa will be hit hard by a decline but some South Asian and Middle East oil exporting countries may be able to witness a significant recovery in 2010.

Vos said a total of 60 developing countries will see further declines in their incomes in 2009.