U.N. expects slowdown of world economy

By Our Special Correspondent

NEW DELHI, OCT. 10. The U.N. expects a slowing down of the world economy as a result of the September 11 attacks on the U.S. and has estimated that world economic growth in 2001 would be down to 1.4 per cent.

The shock is expected to reverberate through the world economy and global financial markets in the coming months. Military and political reactions to the attacks would `greatly amplify' already existing uncertainties about the short-term global outlook and were likely to have significant long-run implications as well, the U.N. report states.

Consequently, the U.N. expected the growth of world gross product to be 1.4 per cent for 2001, with a recovery to two per cent in 2002. The volume of international trade is also expected to register ``virtually no growth'' in 2001, but is expected to increase by four to five per cent in 2002.

The U.N. report anticipates a downturn - worse than previously expected in the U.S. with the attacks expected to cause an absolute decline in the Gross Domestic Product (GDP) in the third and fourth quarters. Therefore, different regions of the world are likely to feel the negative impacts of the slowdown in various degrees and the most severely affected developing economies are expected to be South and East Asia where 2001 GDP growth projections have dropped from 4.1 per cent to 1.7 per cent.

The GDP growth in Africa has been revised downwards from 4.3 per cent to 3.0 per cent and in Latin America, GDP is projected to grow at 0.8 per cent, down from 3.1 per cent. Among developed countries, Canada is expected to feel the greatest impact of the significantly weaker U.S. economy, but Japan's performance could be the weakest, with GDP likely to decline, the U.N. report states.

The report also points to five major economic impacts of the attacks: destruction of human and physical capital; disruption of economic activities; shift in the confidence of consumers and businesses; changes in macroeconomic policies in major economies; and changes in the allocation of resources in the longer run. According to the report, the longer run consequences of the attack are likely to be of greater economic significance than the immediate effects.

Send this article to Friends by E-Mail

Section  : National
Previous : India to campaign for cheap anti-AIDS drugs
Next     : Airlines overcome initial fears