UN warns of austerity measures and reduction of budget deficits in the world, stressing that the difference between rich and developing economies is increasing at the expense of the former.
The 2011 Report of the United Nations Conference on Trade and Development (UNCTAD) confirms a slowdown in economic growth in most developed countries. After a clear increase in 2010 of the world economy by 4%, this year is estimated at 3% on average. “It is becoming increasingly a two-speed recovery”, said Alfredo Calagno, economist at UNCTAD, which estimates an increase of 6% for emerging economies and 1.5% – 2% in the developed world.
The dynamics of emerging economies is primarily driven by domestic demand, stimulated by rising of real wage. East, South and South-East Asia recorded the highest growth rates – over 7% – despite the tighter monetary conditions.
In Latin America, consumption and investment are engines that allow an increase of 5%, according to UN estimates.
“In contrast, elements of economic growth in 2010 – the recovery of stocks and politics of budget recovery – do not help economies”, added the expert. “We know that the private sector has not taken over control from the public sector yet, because unemployment remains high and wages are stagnating. In addition, banks that are in the process of recapitalization, no longer extend credit”, he added.
Therefore, the United Nations warn of adverse effects of austerity policies that feed “the risk of long-term stagnation of GDP and even a recession”.