A woman carries a bunch of flowers as she passes a sale sign displayed in the window of a shop on Oxford Street in London, January 15, 2009. Many UK retailers are struggling as consumers rein in spending amid sliding house prices, soaring unemployment and fears of a deep recession.
The world economy could grow by 1.0percent in 2009, a sharp deceleration from the 2.5 percent growth estimated for 2008 and well below the more robust growth of previous years, according to a UN report released on Thursday.
But in a more pessimistic scenario, the size of the global economy would actually decline in 2009, an occurrence not witnessed since the 1930s, said the World Economic Situation and Prospects 2009.
According to the report, the world economy is mired in the worst financial crisis since the Great Depression.
The financial shockwaves have now triggered a full-fledged economic crisis, with most advanced countries already in recession and the outlook for emerging and other developing economies deteriorating rapidly.
"In the baseline scenario of the United Nations forecast, world gross product is expected to slow to a meagre 1.0 percent in 2009," said the report.
"Given the great uncertainty prevailing today, however, a more pessimistic scenario is entirely possible," it said.
According to the report, if the global credit squeeze is prolonged and confidence in the financial sector is not restored quickly, the developed countries would enter into a deep recession in 2009, with their combined gross domestic product (GDP) falling by 1.5 percent.
Economic growth in developing countries could also slow to 2.7 percent, dangerously low in terms of their ability to sustain poverty reduction efforts and maintain social and political stability.
To stave off the risk of a deep and global recession, the report recommended the implementation of massive, internationally coordinated fiscal stimulus packages that are coherent and mutually reinforcing and aligned with sustainable development goals.
These should be effected in addition to the liquidity and recapitalization measures already undertaken by countries in response to the economic crisis.
