United Nations slashes its global economic growth forecast

United Nations foresees gloomy outlook for this year’s economic growth and citing increased volatility cuts growth expectation by 0.4 percent to 2.4 percent

Photo by: Reuters
Photo by: Reuters

The United Nations on Thursday said it cut its forecast for global economic growth in 2015 by 0.4 percentage point to 2.4 percent, largely due to low commodity prices, increased market volatility and slow growth in emerging market economies.

There will be a slight pickup next year, the world body said in its annual World Economic Situation and Prospects report.

"The world economy is projected to grow by 2.9 percent in 2016 and 3.2 percent in 2017, supported by generally less restrictive fiscal and still accommodative monetary policy stances worldwide," the UN said in a statement accompanying the report.

The International Monetary Fund, also in the UN family, said in October that it had cut its global growth forecast for this year by 0.2 percentage point to 3.1 percent. The IMF also cited declining commodity prices and weaker economic prospects for large emerging market economies.

"Given the much anticipated slowdown in China and persistently weak economic performances in other large emerging economies, notably the Russian Federation and Brazil, the pivot of global growth is partially shifting again towards developed economies," the UN statement said.

The UN report said growth in developing and transition economies was at its weakest since the global financial crisis of 2008-09.

In addition to macroeconomic uncertainties and weak commodity prices, the UN report cited rising volatility in exchange rates and capital flows and stagnant investment and productivity growth as factors behind slowing global growth.