UN predicts increased global economic growth of at least 3 per cent in 2014 and 2015

The United Nations on Wednesday predicted that the global economy will grow by at least 3 per cent annually in the next two years following signs of improvement in many regions.

In its annual economic report, the U.N. said the world experienced subdued growth for a second year, estimating growth in 2013 at 2.1 per cent.

But the U.N. forecast economic growth of 3 per cent in 2014 and 3.3 per cent in 2015, based largely on this year’s third quarter performance.

According to the World Economic Situation and Prospects 2014, a protracted recession in countries using the euro has finally ended, U.S. economic growth strengthened somewhat, and China and India experienced moderate increased growth after two years of backsliding.

All these factors point to increasing growth in the world economy, it said.

Assistant Secretary-General for Economic Development Shamshad Akhtar cautioned that the forecast “is made in the context of many uncertainties and risks coming from possible policy missteps as well as non-economic factors that could stymie growth.”

The report warned that as the U.S. Federal Reserve takes expected action to taper off and eventually end its huge bond-buying program to stimulate the economy, “emerging economies will face more external shocks.” It also cited fragility in the banking system and economies in the euro area, ongoing political wrangling in the U.S. Congress on the budget and debt ceiling, and geopolitical tensions in western Asia and elsewhere.

These and other unexpected events could derail the world economy beyond the U.N.’s projections, the report said.

The U.N. forecast that inflation will remain tame worldwide, that employment will remain a major challenge, and that the price of most primary commodities will remain flat despite moderate growth in international trade to 4.7 per cent in 2014.

In developed countries, the U.N. forecast a 2.5 per cent increase in GDP in the United States in 2014, and a 1.5 per cent growth in GDP in Western Europe and in Japan next year.

In key developing countries, it forecast that growth in Brazil will rebound to 3 per cent in 2014, that China will maintain 7.5 per cent growth in the next few years, that India’s growth will improve to above 5 per cent in 2014, and that Russia’s economic growth will recover modestly to 2.9 per cent in 2014.

The U.N. said Africa’s growth prospects remain relatively robust — up from an estimated 4 per cent rise in GDP in 2013 to 4.7 per cent in 2014.