The world economy is on the verge of a new recession, according to a report by the UN

Source: The Delta World

The world economy is on the verge of a new recession, and what the report status and prospects of the world economy, prepared by the United Nations Conference on trade and development (UNCTAD) and presented on Tuesday, he warns that “a new global recession is a significant possibility”.

Something that probably will happen unless the rulers achieved curb unemployment and prevent the escalation of the risks generated by the sovereign debt crisis and the fragility of the sector

“The world economy is reeling and on the verge of a new recession.” Expected an anemic growth during 2012 and 2013. “The problems that striking the world economy are multiple and interconnected.”

“The greatest challenges are combating the employment crisis and the decline of the prospects for growth, especially in the developed world”, reads the report.

Young unemployment

The text defines unemployment as “Achilles heel” of economic recovery in the majority of developed countries, and asserts that the “overall 64 million jobs deficit should be eliminated”.

“However, with the projection of the recession, deficit of jobs in the world would rise to 71 million, of which 17 million in rich countries”.

In fact, the text indicates that if the situation does not improve, the percentages of unemployment will not again the situation before the crisis until “well beyond 2015?.

Young unemployment is one of the major problems to deal with, given that it reached 18% in 2011, “with particularly surprising situations: in Spain 40% of young people does not have a job”.

The measures are not sufficient

In addition, UNCTAD reveals that if the recession made reality, the growth of the gross domestic product (GDP) global would be limited to 0.5% in 2012, a figure that he rise to 2.6 per cent in the case that “the sovereign debt crisis contained to one or some few small economies”.

The report’s authors considered “quite possible” that the recent measures taken by European Governments to contain the crisis created by the sovereign debt “are not sufficiently effective”.

“Sovereign debt contagion could crush the credit in the world, and create a crash in the financial markets, in a scenario reminiscent of what happened in September 2008 with the collapse of Lehman Brothers holding company”.

“The problem is that despite the statements, it does not seem to, in practice, for in the EU leadership to implement necessary and urgent measures”, said at press conference Robert C. Shelburne, Senior Economist at the United Nations.

Also, the text warns that new measures of fiscal austerity in United States would lead this country into a recession, so it suggests that “the Federal Reserve to respond by adopting more aggressive monetary action”.

Forecasts

The report predicts an increase in the GDP of the European Union in 2012 of 0.7% and 1.7% in 2013.

For United States, UNCTAD envisages an increase of 1.5 per cent in 2012 and 2 per cent in 2013.

With regard to global risks if the economies of United States or the European Union entering recession, the report is translucent: “A recession in Europe or United States may not be enough to induce a global recession, but the collapse of both economies probably did do it”.

In this situation, the report indicates need more fiscal stimulus, coordinated internationally, to combat unemployment in the short term.

“Developed countries should be very cautious not to prematurely embark on policies of fiscal austerity, given the still fragile state of recovery and the high levels of unemployment,” he says.

Meanwhile, the main concern of developing countries will need to avoid that the increase in the already volatile prices of raw materials and the instability of exchange rates undermine growth.

By 2012 the report provides for a 3.3 percent GDP growth for Latin America as a whole; a 2.7 to Brazil; an 8.7 for China; and a 7.7 for the India.

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