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Saturday, 9 June 2012

Euro debt crisis remains biggest threat to global economy, UN reports

UNITED NATIONS, June 7 -- The UN Department of Economic and Social Affairs (UNDESA) has released its mid-year World Economic Situation and Prospects (WEPS) report, in which it states that the continuous euro crisis remains a large threat to the world economy.

"The euro area debt crisis remains the biggest threat to the global economy," said the representative from the UN Department of Public Information, Newton Kanhema, to reporters during a press conference here on Thursday.

"An escalation of the crisis could result in severe turmoil in financial markets," he said.

The WEPS report reflects that, although some growth has been seen in developed countries, they continue to face significant challenges, particularly in Europe. The WEPS forecasts that the economic situation will "remain tepid" for 2012, with a slow- down in China's growth to an estimated 8.3 percent, while India is expected to grow between 6.7 to 7.2 percent during the 2012- 2013 term.

As a proposed solution to the dwindling global economy, assistant secretary-general for DESA, Jomo Kwame Sundaram, stressed the importance of cooperation between all countries.

"International cooperation is extremely important," said Sundaram. "International cooperation is important, because it will ensure, all countries, and all economies will benefit from [ it]."

As developed countries continue to struggle to bounce back, the report says they have to address four major issues: deleveraging banks, firms and households that continue to restrain normal credit flow; the continuous high rate of unemployment; the fiscal austerity responses to rising public debts; and the exposure of banks to sovereign debts, partnered with weakened economies that prolong the stagnation of the crisis.

The report also stresses that the "re-orientation of fiscal policies should be internationally, coordinated, and aligned with structural policies that support direct job creation, and green growth." - 

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