The United Nations cut its forecast for global growth this year, as it warned of a “vicious cycle of downward adjustment” rippling out from the battered United States economy to the rest of the world after last month’s terrorist attacks, The Guardian is reporting this morning.

Warning that the downturn would have a disproportionate impact on the poorest countries, the UN said the world economy was growing at its slowest pace in a decade and that 2002 would see only a “dilatory and tepid” recovery. The world economy is expected to grow by just 1.4% this year, down from 2.4% only three months ago.

Global trade growth will come to a standstill this year, reports the U.K. news paper, as the synchronized slowdown under way even before the events of September 11 is intensified by the impact of the terrorism on transport links and growth.

Almost every major region is affected, with growth in the European Union cut to 1.8% from 2.7%, Japan contracting by 0.5% from growth of 0.7% and the US sliding into recession in the third and four quarters of 2001. In Latin America, where there were new warning yesterday that Argentina’s debt crisis is deepening, growth is expected to be just 0.8% this year, down from an earlier forecast of 3.1%.

“The shock is expected to reverberate through the world economy and global financial markets in the coming months,” the UN said in an update to its global economic outlook. “Military and political reactions to the attacks will greatly amplify already existing uncertainties about the short-term global outlook and are likely to have significant long run implications as well.”

The UN report emerged as the IMF admitted that it had been forced to tear up its global economic forecasts for the third time since the summer in response to the sharply deteriorating outlook. Horst Koumlhler, the Fund’s managing director, said officials were working on fresh predictions, only two weeks after the release of its biannual assessment of global growth.