The United Nations on Thursday slashed its forecast for world growth to 2.6 percent in 2012 and warned the eurozone debt crisis could further hit the global performance. "The world economy is teetering on the brink of another major downturn," the UN's annual economic forecast warned.
After growing 4.0 percent in 2010, the UN predicted 2.6 percent world growth in 2012 and 3.2 percent in 2013. UN economists had earlier said there would be 3.6 percent growth next year. "This forecast is conditioned however on containment of the eurozone debt crisis and a halt to further moves toward stringent fiscal austerity in developed countries," said the UN World Economic Situation and Prospects report. It said 2012 will be a "make or break year" with the world proceeding with slow economic recovery or falling back into recession.
Developing countries, led by China, Brazil and India, are predicted to continue pulling the world economy forward with average growth of 5.4 percent in 2012 and 5.8 percent in 2013. But even this is down from 7.1 percent in 2010. "From the second quarter of 2011, economic growth in most developing countries and economies in transition started to slow notably," said the report which hit out at governments in Europe and North America. "Failure of policymakers, especially those in Europe and the United States, to address the jobs crisis and prevent debt distress and financial sector fragility from escalating, poses the most acute risk for the global economy," the forecast said.