Europe could be hit by a double-dip recession this year, hurting a global economic recovery already weighed down by flagging growth in the United States and Japan, a UN study warned Tuesday. Europe, which is seeing a deepening gap between Germany and the debt-laden economies of Greece, Ireland, Portugal and Spain, will see a double-dip recession unless urgent policy changes are made, a report by the UN Conference for Trade and Development said.
"Europe could well see a double-dip recession while the economies of the United States and Japan might virtually stagnate and possibly also fall back into recession during 2011," it said. The 27-member European Union is expected to grow just 1.5 percent this year, before improving to 1.9 percent in 2012. It expanded 1.7 percent last year.
Europe's peripheral economies will "either remain in recession or see minimal recovery at best," the UN report said, adding that growth in developing countries could fall by almost one percent as a result. While developing countries are expected to be the driver of global growth in coming years, gaining 3.1 percent this year and 3.5 percent in 2012, it may be losing momentum. "The situation appears good but great dangers are appearing," warned UNCTAD's chief economist Heiner Flassbeck. "What we have seen is bright spots in China and India but these bright spots are becoming less and less bright," he said.
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