Euro zone crisis biggest risk to world economy: U.N.

UNITED NATIONS (Reuters) - The euro zone debt crisis is the leading danger for the global economy and any worsening will likely lead to even weaker world growth, the United Nations said in a report on Thursday.

"The euro area debt crisis remains the biggest threat to the world economy," the United Nations said in an update of its "World Economic Situation and Prospects 2012."

"An escalation of the crisis would likely be associated with severe turmoil on financial markets and a sharp rise in global risk aversion, leading to a contraction of economic activity in developed countries, which would spill over to developing countries and economies in transition," the report said.

"After a marked slowdown in 2011, global economic growth will likely remain tepid in 2012, with most regions expanding at a pace below potential," it said.

The world gross product is projected to grow by 2.5 percent in 2012 and 3.1 percent in 2013, following growth of 2.7 per cent in 2011, a slight downward revision from previous forecasts, the report said.

It said that a worldwide unemployment crisis continues, with global jobless rates still above pre-crisis levels and unemployment in the euro area rising rapidly.

(Reporting by Louis Charbonneau; Editing by James Dalgleish)