The UN 'World Economic Situation and Prospects 2012' report has cut the global growth forecast for next year to 2.6 per cent from 4 per cent in 2010. It has called 2012 a "make-or-break" year for the global economy, which will face a "muddle-through" scenario and continue to grow at a slow pace.
"Following two years of anaemic and uneven recovery from the global financial crisis, the world economy is teetering on the brink of another major downturn," the UN report said, warning that "the risks for a double-dip recession have heightened". The report said the failure of policymakers, especially those in Europe and the United States, to address the jobs crisis, prevent sovereign debt distress and escalation of financial sector fragility poses the most acute risk for the global economy in 2012-2013.
Growth in developing countries like India and China, which had stoked the engine of the world economy so far, will also slow down to 5.6 per cent in 2012 from 7.5 per cent in 2010. "Developing countries are expected to be further affected by the economic woes in developed countries through trade and financial channels," the report said. GDP growth in China and India is expected to "remain robust, but to decelerate", it said.