UN says global economy struggles to grow; rate in 2013 will be about 2.2 per cent, same as 2012

The world economy is still in disarray five years after the financial crash, a new U.N. economic report released Monday said.

The U.N. Conference on Trade and Development issued a gloomy assessment of a stagnant global economy.

“The global economy is still struggling to return to a strong and sustained growth path,” UNCTAD reported.

The rate of world output was 2.2 per cent in 2012, and is forecast to grow at a similar rate in 2013, it said.

Developed countries are expected to show the poorest performance, with around 1 per cent increase in gross domestic product. Developing and transition economies are likely to grow by almost 5 per cent and 3 per cent respectively.

“Prior to the Great Recession, exports from developing and transition economies grew rapidly owing to buoyant consumer demand in the developed countries, mainly the United States. This seemed to justify the adoption of an export-oriented growth model,” a formula bound to crash, the report said.

“But the expansion of the world economy, though favourable for many developing countries, was built on unsustainable global demand and financing patterns. Thus, reverting to pre-crisis growth strategies cannot be an option,” the UNCTAD report said.

Even in the fact of five years of crisis, the report said. “The dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all.”

“The momentum in pushing for reform has all but disappeared from the international agenda. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain,” the report said.