UN: World Economy to Grow 2.4% in 2010

By Daniel Schearf

20 January 2010

The United Nations is predicting a mild global economic recovery in 2010 with Asia leading growth. But the U.N. warns if governments withdraw stimulus measures too early, the global economy could slump again.

In its 2010 economic report the U.N. says East and South Asian economies will lead the world recovery.

The report issued Wednesday says the global economy is recovering and if supportive policies continue the world should see about 2.4 percent growth this year.

East Asia is expected to see average gross domestic product grow by 6.7 percent, the highest rate in the world, followed by South Asia at 5.5 percent.

Tiziana Bonapace is a senior economist with the U.N. Economic and Social Commission for Asia and the Pacific in Bangkok.

"I think this region is fortunate in the sense that it entered the financial crisis with strong macroeconomic fundamentals," said Bonapace. "Most countries had fiscal surplus at the start of the crisis and many had public debt levels that are below 60 percent of GDP."

Many countries in Asia quickly enacted plans to stimulate their economies after the global crisis began in 2008.

The report lauds Vietnam, Indonesia, and China for successfully spurring domestic demand with increased credit.

In contrast, the report says major developed economies are expected to grow at an average 1.3 percent in 2010.

Developing countries are expected to recover at a faster pace of 5.3 percent. Despite the quicker recovery, the U.N. report points out that in developing Asia and Africa the financial crisis pushed more people into jobs that do not provide social protections. The U.N. says since the crisis the global share of working poor has increased to 64 percent in 2009 from 59 percent two years earlier.

Bonapace says the Asia-Pacific region has weathered the crisis better than developed countries.

"There isn't the pressure on governments at the moment in this region that there is on governments in developed countries where deficits and public debts are much bigger and are growing at an alarming pace," he said. "So, I think the situation is better."

The U.N. says the global economic recovery is expected to be sluggish. Consumption and investment remain weak and unemployment continues to rise.

The report says much of the global rebound is the result of government stimulus efforts and warns if those measures are withdrawn too early, the world could dip back into crisis.