United Nations Radio

The world economy is in its severest financial crisis since the Great Depression.

global economic market

That is the conclusion of the annual UN report "The World Economic Situation and Prospects" for 2009. The report predicts that global economic growth this year will be only one percent. That compares to two and a half percent growth last year, which was already a slowdown from the robust rate of the previous five years. UN Radio's Rocio Franco found out more from Robert Vos of the UN's Economic and Social Affairs Department.

Vos: The report concludes that we are in a situation of serious recession, particularly in the major developed countries and industrial countries, in the United States, Europe, Japan, and that this crisis is already being transmitted to many parts of the rest of the world, so we see slower growth in many developing countries, many economies in transition are feeling the heat from this crisis, and it all adds up that already for 2009, in our baseline scenario, we are expecting a decline of income per capita in the world, and that's something that has not happened since the Second World War. So we're really in a serious crisis, which we can denominate as the worst crisis we've seen since the Great Depression of the 1930s.

Franco: There are several reports also from the UN that already talked about this topic. Are there new recommendations or new aspects to take away from this report?

Vos: Well, this is our annual report on the world economy and we've been warning for the risk of a crisis to happen quite a few years ago when we saw the problems in the US housing market emerging and that we analyzed that that was interconnected with the rest of the world. So we've been pretty much ahead of the curve of many other people and we also insisted that would quickly be transmitted to the rest of the world. So some analysts that saw developing countries grow very fast and strong over the past couple of years thought, well, we're now in an age where the developing countries are no longer so dependent on growth in the United States and in Europe. We said, well, that's a misconception and they're very interconnected. Also, for that reason, what we stress in this report as we did in previous reports is that the way to counteract this is through internationally concerted policies. So after a lot of efforts have been made to bail out banks, to do monetary stimulus, lowering interest rates, and do liquidity injections into the financial system, well, that was needed to some extent to shore up the financial system, although the problems have not gone away yet, but most of those measures have now come to an end of their effectiveness, and what we need now is a lot of fiscal stimulus around the world, so where many leaders in the world, in the United States - the new President of the United States is talking about a fiscal stimulus package, in Europe they're thinking of a fiscal stimulus package, in China they've already put one together, but we say in the report - that's all good, but we need greater coordination between these countries and also other countries in order to do enough. And we have to do a lot in order to avoid that the present recession will turn out into another great depression.

Presenter: Robert Vos is the Director of Development Policy and Analysis at the UN Department of Economic and Social Affairs. You can find the World Economic Situation and Prospects report on the UN web site un.org.

Producers: Rocio Franco/Gerry Adams

(duration: 3'41")