UN calls for 'massive' economic stimulus to counter global crisis

---

DOHA, Dec 1 (AFP): A massive and coherent economic stimulus must take place soon to counter the global economic downturn, UN experts said in a report published today in Doha.
The UN called for "massive economic stimulus packages that are coherent and mutually reinforcing on a global basis, and linked with sustainable development imperatives" in its Report on World Economic Situation and Prospects 2009 presented at an international ministerial conference on development financing in the Qatari capital.
The packages "should come on top of the liquidity and recapitalisation measures already undertaken by countries in response to the economic crisis," the report added.
UN economists also proposed "stronger regulation of financial markets and institutions, adequate international liquidity provisioning, an overhaul of the international reserve system and a more inclusive and effective global economic governance, to prevent against any future repetition."
The report made dire projections for economic growth across the globe in 2009, with an overall drop in per capita income and developed nations most affected by the global financial crisis. Developed countries will see a 0.5 per cent decline in output, compared with an average growth of 5.3 per cent in transition economies and 4.6 per cent in developing countries. World growth will most likely not exceed one per cent in 2009, compared to 2.5 per cent in 2008 and rates varying between 3.5 and four per cent in the four previous years.
US growth will decline by one percent, with the Eurozone declining by 0.7 per cent and Japan by 0.3 per cent. Growth in India, Brazil and Mexico is slated at seven per cent, 2.9 per cent and 0.7 per cent, respectively.
The United States has already launched an economic recovery plan worth 700 billion dollars and China, the world's fourth- largest economy, has initiated an unprecedented four-trillion- yuan (590-billion-dollar) stimulus package.
Despite these and other measures around the world to inject money in the banking system and lower interest rates, confidence has not been restored. "With limited space for monetary stimulus, fiscal policy options are needed to reactivate the global economy," the report proposes.
This may not be as much as seven trillion or 11 billion because "those are commitments rather than money actually spent," he said, noting "a stimulus of around one to two per cent of GDP across the world should be enough to stave off negative growth."
Another report adds: World economic growth will slow to one per cent in 2009 from 2.5 per cent this year as the financial crisis bites and the global economy may even contract if stimulus packages prove too little too late, a UN report said.
The report on World Economic Situation and Prospects 2009, an advance copy of which was issued at a development conference in Doha Monday, urged coordinated international stimulus packages to limit the impact of a downturn in Western economies on poorer countries.
Next year's growth forecasts compare to global growth rates of 3.5 to four per cent from 2004-2007 and the report said the economic environment for developing countries had deteriorated sharply after early complacency.
"Most developed economies entered into recession during the second half of 2008, and the economic slowdown has spread to developing countries and the economies in transition," the report said.