GENEVA The global economy should escape recession despite a sharp economic slowdown in major states and world output is expected to pick up towards the end of the year, according to a United Nations report on Thursday.

But the biggest risk to recovery remained the possibility that the U.S. economy could weaken more than expected, according to the UN World Economic and Social Survey 2001.

"While there are a number of further downside risks, the probability of a global recession is not considered to be high," the survey said.

Growth in the U.S. economy, the world's biggest, was seen sliding to 1.8 percent in 2001 from five percent a year earlier, before bouncing back to three percent growth in 2002.

But there was still a "major risk" of a "deeper and longer slowdown than expected in the United States".

"European economies would then be unlikely to maintain the forecast degree of buoyancy. It would also be more difficult for Japan to address its lingering structural problems," it said.

The global economy was seen as growing 2.5 percent this year, down from four percent in 2000, and significantly short of the 3.5 percent initially projected by the United Nations, Reuters reported.

Output should rally slightly to three percent next year.

The combined gross domestic product (GDP) of the developed economies was seen rising three percent next year, up from 1.8 percent in 2001.

The cooling in international trade was likely to be even more marked, with growth dropping to five percent this year from 12 percent previously. Next year trade should rise 6.5 percent, the report said.

Amongst factors contributing to the worldwide slowdown were the tightening of monetary policy last year, the collapse of equity markets, consolidation in the technology sector, higher oil costs, natural disasters, armed conflicts and mad cow disease, it said.

Subsequent substantial monetary easing and U.S. domestic tax cuts will propel growth in 2002, according to the survey, of which only the first chapter has so far been released.

Inflation would likely remain benign with the slowdown in economic growth worldwide expected to create spare capacity and to remove some of the inflationary pressures built up by rising prices of oil and high-technology goods.

The forecasts were based on a "V-shaped" recovery in the United States -- where the intense deceleration in growth will be followed by a correspondingly rapid acceleration.