World faces risk of a sharp slowdown,says UN

“Widening fiscal deficit and rising public debt have undermined support for future stimuli,” the report said. Growth in developing countries,which have held up global GDP figures,is expected to inch up from 6 per cent this year to 6.1 per cent in 2012. China’s growth would increase from 8.9 per cent to 9 per cent and India’s from 8.2 per cent to 8.4 per cent. Brazil’s growth was expected to rise 0.7 percentage points to 5.2 per cent in 2012.

But “the recovery in many of the least developed countries will be below potential”,the report warned.

The United States was expected to return to pre-crisis levels of gross domestic product this year but employment would take another four years to recover. Japan is likely to grow even slower while Europe may find itself stifled with austerity measures,the report said.

Tighter fiscal policy might lead to higher unemployment in developed countries,worsening the long-term effects of the debt crisis.

“The longer-term economic consequences of the present crisis are already becoming visible as the share of the structurally or long-term unemployed has increased significantly in most developed countries since mid-2007,” the document warned.