Mustafa Çağlayan
December 10, 2015•Update: December 10, 2015
NEW YORK
The United Nations on Thursday downgraded its world economic growth projections for 2015.
Citing weak aggregate demand, falling commodity prices and increasing volatility, the UN Development Policy and Analysis now predicts the global growth at 2.4 percent in 2015.
It marks a downward revision by 0.4 percentage points from its forecast presented six months ago.
The agency also lowered its growth estimate for 2016 to 2.9 percent, 0.2 points lower than the May forecast.
"Amid lower commodity prices, large capital outflows and increased financial market volatility, growth in developing and transition economies has slowed to its weakest pace since the global financial crisis of 2008/2009," the agency said in a preview to its upcoming World Economic Situation and Prospects 2016 report, due for released in January.
"Given the much anticipated slowdown in China and persistently weak economic performances in other large emerging
economies, notably the Russian Federation and Brazil, the pivot of global growth is partially shifting again towards developed economies," the agency said.
It said economic slowdown in developing and transition economies is expected to bottom out and growth will gradually recover during the 2016-2017 period.
The agency also dramatically lowered its growth expectations for Russia and Brazil.
The Russian economy is now forecast to shrink 3.8 percent in 2015, a downward revision of 0.8 percentage points from projections made in May. Brazil is estimated to shrink 2.8 percent, 1.7 points lower than the May forecast.
The agency said it identified five major headwinds for the global economy: persistent macroeconomic uncertainties; low commodity prices and diminished trade flows; rising volatility in exchange rates and capital flows; stagnant investment and productivity growth; and continued disconnect between finance and real sector activities.
"The report highlights that monetary policies did most of the heavy-lifting since the global crisis to support growth but the time has come for fiscal policies to play a greater role. Well-designed and targeted labor market strategies are needed to complement fiscal policies to re-invigorate productivity, employment generation and output growth," it added.
