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Gross world product to grow only 1.5% in 2002: UN

The United Nations on Thursday, forecasting a slow recovery from the economic downturn, projected a growth of only 1.5 per cent in gross world product in 2002 and said global recession is hitting the poor countries of East Asia and Latin America.

The weakness in the world economy has become widespread, with more than a dozen economies in recession and more than three-quarters growing less than they did a year ago.

The UN's World economic situation and prospects 2002 report suggests that this modest improvement was hostage to a number of economic uncertainties.

It involves risks because of the US' still high equity prices, its low savings rate, its high level of private sector debt and its external deficits.

The difficulties in Japan and the uncertainties surrounding the Argentinean situation are additional fragilities.

The double-barrelled impact of GWP growth that lags behind world population growth in 2001 and 2002 poses serious difficulties for the developing countries, according to the report.

Several of these countries experienced a fall in output in 2001 and, on a per capita basis, there was a setback in East and West Asia and Latin America and the Caribbean.

These reversals compounds the challenge of reducing the number of people living in poverty.

India's GDP to grow by 5.5% in current year

India's GDP is projected to grow at 5.5 per cent during the current year, up from last year's 4.7 per cent, but its fiscal situation is precarious, the UN report said.

Among developing countries, India will have the highest growth rate after China, but its fiscal situation, along with that of Sri Lanka, remains "precarious, notwithstanding their reform efforts," it says.

"They are aiming to reduce their Budget deficits through increased revenues but this is a difficult task in a slowing economy," the report notes.

China continues to lead with a projected GDP growth of seven and a quarter per cent against last year's 7.3 per cent and eight per cent in 2000.

Pakistan, it says, will continue to be vulnerable to the possibility of disrupted economic activity and additional risks brought about by persisting instability in Afghanistan.

"Export orders have fallen, in part because of rising insurance costs. Moreover, any further need to host a large population of refugees or to maintain increased security costs will aggravate the country's already fragile fiscal position," it says.

Pakistan, it says, has been complying with IMF-agreed targets and forecasts that it is likely to receive substantial external support, including some debt forgiveness and concessional loans.

"This may ease the tightness in its Budget and enable to increase development spending, although not immediately," the report adds.

UNI and PTI
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