UN cuts global economic growth forecast for 2016

A worker stitches hospital scrubs for export at a factory in Kenya on May 6, 2016.
A worker stitches hospital scrubs for export at a factory in Kenya on May 6, 2016.PHOTO: BLOOMBERG

UNITED NATIONS (REUTERS) - The United Nations on Thursday said it cut its forecast for global economic growth in 2016 by half a percentage point to 2.4 per cent, largely due to downward revisions for Africa, the Commonwealth of Independent States (CIS) and Latin America.

In a new report entitled "World Economic Situation and Prospects 2016," the UN said it has lowered its forecast for growth of world gross product this year to 2.4 per cent, the same as in 2015, from its December forecast of 2.9 per cent.

"Global economic growth prospects for 2017 also remain well below pre-crisis trends, and a protracted period of slow productivity growth and feeble investment weigh on the longer-term potential of the global economy," it said.

It cited weak demand in developed economies as a major drag on global growth, alongside low commodity prices, mounting fiscal and current-account imbalances and policy tightening in commodity-exporting economies.

Other negative factors, the report said, are "severe weather-related shocks, political challenges and large capital outflows in many developing regions."

In the CIS region of the former Soviet Union, the report said Azerbaijan, Kazakhstan and Russia will likely see declines in gross domestic product this year and said international sanctions are among the major negative factors for Russia's economy.

Another important factor is "Brazil being mired in a deeper-than-expected recession," it said.

Concerns about the upcoming referendum on European Union membership in Britain also pose a potential risk for the global economy.