The global economy will grow by only 0.5 per cent in 2012, effectively shrinking on a per-capita basis, unless there is rapid action to create jobs, prevent sovereign debt distress and shore up fragile banks, according to the UN.

The annual UN World Economic Situation and Prospects report forecast average economic growth of 2.6 per cent in 2012 and 3.2 per cent in 2013, assuming benign conditions in a “make-or-break year” for economic recovery.