Monthly Briefing on the World Economic Situation and Prospects, No. 38

The world economy is teetering on the brink of another major downturn. Output growth already slowed considerably to an estimated 2.8 per cent in 2011. Based on relatively optimistic baseline assumptions, the United Nations foresees world gross product (WGP)?growth of 2.6 per cent for 2012 and 3.2 per cent for 2013. If the European sovereign debt crisis were to spin out of control and the?weaknesses in the United States economy interact to create a downward spiral, the world economy could plunge into a double-dip?recession. Alternatively, policy coordination that boosts aggregate demand and more directly attacks unemployment could improve?prospects for economic growth.

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