European debt crisis, high unemployment threaten to slow down global economy – UN
Countries throughout the world will experience an economic slowdown this year. According to a United Nations report governments must urgently address high unemployment rates, particularly among youth.
The World Economic Situation and Prospects 2012 report gives a detailed picture on seven geographical regions. It also forecasts that growth rates for the next two years will slow down in most of them.
The African continent will however continue to enjoy growth due to stable commodity prices and foreign investment.
The report, released by the UN Department of Economic and Social Affairs, points to the European sovereign debt crisis that erupted in Greece last May as a major shock to the global economy.
The report estimates that growth in the European Union is expected to be only 0.7 per cent in 2012, substantially lower than the 1.6 per cent growth registered last year. In addition, unemployment throughout the continent will remain near 10 per cent in the euro area, having changed very little since September 2009.
Africa is expected to continue to grow, defying the global trend. The continent is forecast to see an increase in its overall growth from 2.7 per cent in 2011 to 5 per cent in 2012 and 5.1 per cent in 2013.
This growth will mainly be driven by relatively strong commodity prices, solid external capital inflows and continued demand and investment from Asia.
However, growth will vary greatly among countries in the continent due to military conflicts, corruption, lack of infrastructure and severe drought in certain areas.
The report also warns that unemployment and poverty remain major problems and sources of instability, which have already led to political unrest in North Africa. South Africa is expected to have the strongest economic growth in 2012, supported by growing demand from Asia, continued fiscal stimulus measures and an increase in consumption driven by rising wages.
The economic picture in the Arab World will continue to be subject of high uncertainty due to the political transition and civil protests brought by the Arab Spring. Regional growth is forecast to decline from 6.6 per cent to 3.7 per cent as violent clashes hampered economic activity in several Arab countries.
