PRESS CONFERENCE LAUNCHING UNITED NATIONS WORLD ECONOMIC AND SOCIAL SURVEY

PRESS CONFERENCE LAUNCHING UNITED NATIONS WORLD ECONOMIC AND SOCIAL SURVEY

The world economy is experiencing a significant decline in global output and trade which threatens to continue into the second half of this year, according to the United Nations World Economic and Social Survey 2001, being released simultaneously in New York and Geneva on Friday, 13 July.

The slowdown in the major world economies, particularly the United States, which began in the second half of 2000, is already affecting the short-term growth of developing countries and economies in transition, according to the report.

The document will form the basis of discussion at the three-day high-level dialogue, starting next Monday in Geneva among the heads of the Bretton Woods institutions, the World Trade Organization and the United Nations, along with member States of the Economic and Social Council.  The Secretary-General is expected to address the high-level meeting.

The first day will be devoted to the report, with the main part of the session focusing on the role of the United Nations in Africa.  A ministerial declaration on the theme of Africa would be issued.

The report was introduced at a Headquarters press briefing today by Ian Kinniburgh, Director of the Development Policy Analysis Division of the Department of Economic and Social Affairs.

The report also looks at the prospects for the developing countries and economies in transition.  Because of the importance of the United States in driving the world economy, Mr. Kinniburgh said attention was given in the report to the evolution of the United States economy.

While there were a number of further downside risks, the report indicates that the probability of a global recession was not considered to be high, he continued.  The policy responses in major developed economies since the beginning of the year, including reductions in interest rates and fiscal stimuli, had produced cautious optimism that the slowdown in global growth would end by late 2001.

Mr. Kinniburgh said the causes of the slowdown had to be examined, as well as what would be required to encourage a recovery.  There was a lot of concern that the economy was moving “too fast”.  Deliberate acts had been tried since 1999 to try to stem some of the “steam” in the growth.  The other causes for the decline included high energy and stock market prices.  Still, other causes included the fallback in equity markets; the collapse of activity in the information technology sector; and the rapid slow down in investments.  Investments in the high technology sector could not be sustained.

The report asserted that the short-term outlook for the global economy depended to a large extent on the path of the recovery in the developed countries, most particularly the United States.  It also depended on the consequent

developments in international markets and on the ability of developing countries and economies in transition to absorb the resulting negative external shocks.

Discussing the situation in Africa, the report stated that aggregate gross domestic product (GDP) growth was expected to accelerate from just over 3 per cent in 2000 to about 4 ¼ per cent in 2001-2002, in spite of the adverse international environment.  With the moderate decrease in oil prices and some improvement in a number of commodity markets, economic prospects in some of the oil-importing countries should improve in 2001.

The report noted that a rapid acceleration in growth was expected, starting in the second half of 2002.  “This should allow global economic growth to return to its long-run pace of about 3 per cent in 2002”, the report observed.  It warned, however, of some substantial uncertainties and several downside risks that might lead to a less attractive outcome.

The report further observed that the “biggest risk” for the global economic outlook was “a deeper and longer slowdown than anticipated in the United States” with larger spillovers to the rest of the world through sharp adjustments in its current-account deficit. 

Earlier, Mr. Kinniburgh said last year was “a very good year” and that developing countries and economies in transition did “remarkably well”.  The economies of unusually large numbers of developing countries grew above 3 per cent per capita.  Relatively few of them suffered a decline of per capita income.

None of the economies in transition “went backwards” in their GDP, and “so the year 2,000 was a remarkably good year”.  There was some hope that the optimism would be maintained into 2001.  As was widely known, however, he said some of that momentum had been lost and the United States economy, which supported the rest of the world economy, now seemed to have stalled or slowed down.

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