UNITED NATIONS (AP) — The United Nations is lowering its growth estimate for the global economy this year, saying its previous forecast of 3.1 percent growth in 2015 is now more likely to be 2.8 percent instead.
The World Economic Situation and Prospects mid-year report released Tuesday says the dip reflects a worsening in Latin America in particular as the region deals with lower commodity prices.
Overall, the forecast expects modest global growth the rest of this year and next year, which could see an improvement to 3.1 percent.
The U.N. is keeping a wary eye on upcoming monetary policy changes in the United States, where the Federal Reserve is "expected to start raising interest rates in the second half of 2015," as well as uncertainty about the Greek debt crisis' effect on the eurozone and possible "spillovers" of conflicts including Yemen, Syria and Ukraine.
"In the case of Yemen ... the main source of risk is the possible closure of the route through the Bab el-Mandeb Straits, used by tankers to transport crude oil out of the Gulf region," the report says.
Around the world, the drop in prices for oil and other commodities has hurt countries whose economies largely depend on them, while commodity-importing countries benefit from being able to buy more for less. Oil prices are expected to recover slowly, the report says.
Russia has been hit hard by the oil price decline. Its economy is expected to shrink by 3 percent this year and grow by just 0.1 percent in 2016.
The report sees India's growth surpassing China's both this year and next. India is expected to grow by 7.6 percent this year and 7.7 percent next year, while China's strong growth of recent years continues to settle at 7.0 percent this year and 6.8 next year.
The United States, Japan and the European Union are more sedate. The U.S. is expected to grow by 2.8 percent this year and 2.7 percent next year. Japan's growth is projected at 1.2 percent this year and 1 percent next year, while the EU is set to grow 1.9 percent this year and 2.1 percent in 2016.
Developing countries' average growth is seen as staying at 4.4 percent.
"While the recovery in developed economies is improving, many countries still face considerable headwinds from the legacies of the global financial crisis," the report says.
The forecast says job creation is still weak, with a worrying note for the future: "The global youth unemployment rate is estimated at 13 percent, three times higher than the overall rate, as young people were disproportionately affected by the financial crisis."
Africa overall is expected to see 4.0 percent growth this year and 4.8 percent growth next year. "A large part of the downward revisions for North Africa and for Africa as a whole is due to Libya, which remains trapped in a civil war," the report says.
Latin America and the Caribbean make up the shakiest region outside Russia, with just 0.5 percent growth expected this year and 1.7 percent next year. "Venezuela is falling into a deeper recession, while Brazil and Argentina are expected to contract by 1.1 percent and 0.4 percent in 2015, respectively," the report says.
East and South Asia are expected to keep growth steady at 6.2 percent this year and 6.1 percent in 2016. "East Asian exports are projected to remain relatively strong," the report says.