DUSHANBE, May 29, 2009, Asia-Plus — The United Nations has downgraded its economic forecast for 2009, from an already pessimistic estimate made five months ago, and said the poorest countries would be hit the hardest, the Un News Center reported on May 27.
“The world economy is expected to shrink by 2.6 per cent in 2009, down from a decline by 0.5 per cent according to the pessimistic scenario of the forecast presented in January,” according to a press release on the mid-year report “World Economic Situation and Prospects 2009,” by the UN Department of Economic and Social Affairs (DESA).
With its increasing impact both in scope and depth worldwide, the global financial crisis poses a significant threat to world economic and social development, including the fulfillment of the Millennium Development Goals and other internationally agreed development goals, according to DESA.
Although the crisis originated in developed countries, “it is now evident that developing countries are being hit disproportionately hard through capital reversals, rising borrowing costs, collapsing world trade and commodity prices, and subsiding remittance flows,” it stated.
During the first quarter of this year, world trade dwindled at a “dramatic” annual rate of more than 40 per cent, with the deepest impact felt by the exporting countries of Asia.
The report estimated that between 73 and 105 million more people will remain poor or fall into poverty in comparison with a situation in which pre-crisis growth would have continued.
The report added that at present the stimulus is very unbalanced. “Eighty per cent of the stimulus is concentrated in developed countries, while most developing countries lack the fiscal space to provide social protection and counteract the consequences of the crisis.
“In a more balanced global response, about $500 billion in additional development finance would be made available for countercyclical responses by developing countries.”
The report predicted that with a coordinated, development-oriented policy scenario, the world economy would recover to an annual growth of 4-5 per cent in 2010-2015, led by a robust growth of 7 per cent per year in developing countries. This is in contrast to the uncoordinated scenario in which developing countries would recover at only half that rate,” DESA said.
