Geneva, July 11:
The United Nations slightly raised its prediction for global economic growth this year to 3.6 per cent today, as major economies rebounded and emerging nations maintained their momentum.
The UNâ€™s new forecast is up from the 3.3 per cent growth it expected when it released its World Economic Situation and Prospects report in January. Global growth for last year was 3.6 per cent, the same pace now seen for this year.
â€œThe world economy started 2006 on a strong note,â€ the UN said in its midyear update, â€œAs a number of major developed economies managed to rebound from the notable slowdown in late 2005, many developing countries maintained the momentum of broad and solid growth.â€
The world has benefited from the breadth of the economic expansion over the past two years, the report stated. â€œA large number of developing countries have registered solid growth,â€ it stated.
Large global imbalances, which have continued to widen, are the major concern for the remainder of the year, the UN said.
â€œThe current account deficit of the United States surpassed $800 billion in 2005 and is expected to exceed $900 billion in 2006,â€ it said, â€œOil-exporting countries continue to experience increases in their surpluses.â€
Higher oil prices have driven the rise in headline inflation rates in most countries, but core inflation rates â€” excluding volatile items like food and energy â€” have been much more stable, â€œindicating the pass-through of higher oil prices into overall inflation has been limited,â€ the report stated.
One reason is that a number of developing countries have eased the impact of high oil prices on consumers by using subsidies and other measures, but those supports are too expensive to be maintained over the long term, it said.
â€œAs these countries reduce these measures, a stronger direct impact of higher oil prices on inflation is expected, as is already the case in Indonesia and a few other economies,â€ the UN said.