UN report: World economy entering into recession

The world economy could grow by 1.0percent in 2009, a sharp deceleration from the 2.5 percent growth estimated for 2008 and well below the more robust growth of previous years, according to a UN report released on Thursday.

• But in a more pessimistic scenario, the size of the global economy would actually decline in 2009, an occurrence not witnessed since the 1930s, said the World Economic Situation and Prospects 2009.
• According to the report, the world economy is mired in the worst financial crisis since the Great Depression. 
•  The financial shockwaves have now triggered a full-fledged economic crisis, with most advanced countries already in recession and the outlook for emerging and other developing economies deteriorating rapidly.
• “In the baseline scenario of the United Nations forecast, world gross product is expected to slow to a meagre 1.0 percent in 2009,” said the report.
• “Given the great uncertainty prevailing today, however, a more pessimistic scenario is entirely possible,” it said.
• According to the report, if the global credit squeeze is prolonged and confidence in the financial sector is not restored quickly, the developed countries would enter into a deep recession in 2009, with their combined gross domestic product (GDP) falling by 1.5 percent.
• Economic growth in developing countries could also slow to 2.7 percent, dangerously low in terms of their ability to sustain poverty reduction efforts and maintain social and political stability. 
•  To stave off the risk of a deep and global recession, the report recommended the implementation of massive, internationally coordinated fiscal stimulus packages that are coherent and mutually reinforcing and aligned with sustainable development goals. 
•  These should be effected in addition to the liquidity and recapitalization measures already undertaken by countries in response to the economic crisis.