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Released Date - January 21, 2010
U.S – WORLD ECONOMY: AFP PACNEWS BIZ: Thurs 21 Jan 2010
World could see 'double dip recession'
21 JANUARY 2010 NEW YORK (AFP) ---- The world economy is set to bounce back in 2010 with growth of 2.4 per cent but could slump back into recession if state stimulus spending is wound up too early, the United Nations (UN) says.
The UN's preliminary report on the World Economic Situation and Prospects 2010 cautioned that a “premature” removal of state support could trigger the second part of a “double dip recession” after last year's contraction.
World gross product fell by an estimated 2.2 per cent in 2009, UN economic bodies estimated in a preliminary report.
“Premised on a continued supportive policy stance worldwide, a mild growth of 2.4 per cent is forecast” for 2010, the report released on Wednesday added.
The UN warned that the recovery was uneven and conditions for sustained growth were fragile, with consumer demand and investment remaining weak as unemployment continued to rise.
It cautioned against any early move by governments to unwind a total of about $US2.6 trillion ($A2.81 trillion) of economic stimulus measures for 2009-2010 in the wake of the financial and economic crises.
“The rebound in domestic demand remains tentative at best in many economies and is far from self sustaining,” the report said.
“Much of the rebound in the real economy is due to the strong fiscal stimulus provided by governments in a large number of developed and developing countries.”
Industry was also restocking inventories it had run down during the crisis, reviving production, the report added.
An additional $US20 trillion ($A21.63 trillion) of taxpayers' money was set aside to rescue the financial sector after the credit crunch toppled major banks, the UN also underlined.
It also tempered optimism about the resurgence in stock markets.
“The stronger than expected rebound in equity prices worldwide may belie the fact that there are still problems remaining in financial sectors in major economies which continue to constrain credit availability and could lead to more failures of financial institutions in the near future,” the report said….PNS (ENDS) |
