Warning issued over global economy risks

A sluggish global economy will pose challenges and policies must be tailored to address the risks, a top think tank said on Monday.

"The global economy will experience low growth, at best, over the next few years," said Zhang Yuyan, director of the Institute of World Economy and Politics at the Chinese Academy of Social Sciences.

The academy's latest report, The World Economy Analysis and Forecast, put global growth for 2013 at 3.5 percent.

The forecast by major international institutions, such as the World Bank, International Monetary Fund, and the United Nations, put global growth rates between 3.6 and 4 percent in 2013.

Zhang said the forecast was due to concerns over the "fiscal cliff" in the US, the eurozone crisis and growing trade protectionism.

The fiscal cliff refers to tax increases and spending cuts that will automatically kick in at the beginning of 2013 if a budget agreement is not reached.

"If the US falls off the fiscal cliff it will enter a full recession and pose a major threat to the global economy.

"Even if it successfully avoids the cliff, it will adopt further easing measures that will lead to excessive global liquidity, which will push up inflation in other countries," Zhang said.

The academy report forecast that the US economy will rise slightly from 2.4 percent in 2012 to 2.5 percent in 2013.

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