The global economy is expected to improve moderately in 2014 and 2015 compared to last year despite grim prospects for some developing economies, the United Nations said Wednesday. The UN World Economic Situation and Prospects report forecasts world gross product (WGP) of 2.8 per cent in 2014 and 3.2 per cent in 2015, a modest growth up from 2.2 per cent in 2013. In January the UN predicted WGP of 3 per cent in 2014 and 3.3 percent in 2015, but UN officials said developments such as rising insecurity in Africa, the political crisis in Ukraine and the effects of climate change had prompted a revision. "The escalation of political crisis in Ukraine and the associated geopolitical tensions were not in the assumptions for our previous forecast," said Pingfan Hong, head of the Global Economic Monitoring Unit for the UN Department of Economic and Social Affairs. "The winter in north America was exceptionally colder and longer than usual, significantly impeding economic activities in the US," Hong told reporters in New York. The isolation of Russia due to its interference in Ukraine has had dire consequences for its economy, with the growth rate down to 1 per cent for this year. "That is downgrade of 1.9 per cent, so otherwise Russia could have a growth by about 2.9 per cent for this year," Hong said. The UN economists, however, said that the pace of expansion was still low compared to the growth path before the 2008 global financial crisis, which mired many countries in unemployment and cycles of austerity. "More than five years after the financial crisis, the world continues to struggle with getting the global economic engine back to running at full capacity," Hong said. "Compared to pre-crisis trends, we have not sufficiently boosted output, trade and employment to their potential levels," he said. The report warns that there were risks and uncertainties for the world economy's growth, which included international spill-overs from ongoing adjustment in monetary policies by developed economies, vulnerabilities of emerging economies, remaining fragilities in the euro area, and geopolitical tensions. The economies of developed countries - North America, Europe and Asia - are all aligned towards positive economic growth over the next two years. Their economies are projected at 2.0 per cent growth in 2014 and 2.4 per cent in 2015, the report said. The world trade was flat in the first quarter of 2014, but that will change as real exports are forecast to grow by 4.1 per cent in 2014, almost twice as fast as in 2013. The report called for "strengthening international policy coordination to support a robust recovery of output and jobs, cooperation in international financial reforms and sufficient development financing resources to the least developed countries."
