The world economy is expected to slowly rebound in 2010 but not without a risk of a " double-dip recession" if policymakers do not undertake significant "rebalancing acts" warns a pre-release report here Wednesday by the UN economic division, the United Nations said.
The statement was contained in the preview of the annual report, entitled "the World Economic Situation and Prospects 2010 (WESP)," which was released here by the UN Department of Economic and Social Affairs (DESA), the UN Conference on Trade and Development (UNCTAD) and five UN regional commissions.
The report warned that the recovery is "uneven" and conditions remain "fragile."
Director Rob Vos of the Development Policy and Analysis Division in DESA at the launch told reporters that a "mild recovery" in the world economy was expected to happen, noting that it would be led by developing Asia which would experience the strongest recovery in 2010.
In an overview of the global economic recovery, the report said global equity markets have rebounded, as well as risk premiums on lending fallen. Most notably, international and trade and global industrial production is recovering due to a number of countries showing positive growth of gross domestic (GDP).
The report recognized that the "economic revival" was a byproduct of the massive fiscal stimulus by governments worldwide towards the end of 2008. Citing that global demand remains weak, if governments retreat from those stimulus measures, the report warned it could "abort the incipient recovery."
The report indicated that fiscal stimulus measures came to 2.6 trillion U.S. dollars over 2009 and 2010 with an additional 20 trillion dollars of taxpayer money put aside for financial sector rescue operations.
The challenge, the report named, would be in keeping with the momentum of stimulus measures so the path towards sustainability can be achieved - as well as "rebalancing global growth" which is crucial in evading the recurrence of global imbalances.
The report noted that this would prevent the global economy in falling into a "double-dip recession," particularly citing that with the continued United States deficit, it would cause a "hard landing" of the U.S. dollar -- which would in turn create a "new wave" of economic instability.
In maintaining the stimulus measures from worldwide governments, the report projected a worldwide growth of 2.4 percent.
Asia, which is expected to show the strongest growth, would increase to 5.3 percent in 2010, up from 1.9 percent in 2009 said the report.
Projecting that the global economic recovery would "remain sluggish" and showing high employment rates with low inflation, the growth would remain "well below potential and the pre-crisis levels of performance in the developing world."
It warned that "it will take more time and greater efforts to make up for the significant setbacks" in what has been achieved so far in the Millennium Development Goals (MDGs), the fight against hunger and poverty reduction among many.