According to the U.N., the economic woes in Europe, the U.S. and Japan, where deflationary conditions continue to prevail, are spilling over to developing countries which are seeing weaker demand for their exports and heightened volatility in commodity prices and the flow of capital.

The largest developing economies including China, India and Brazil, are also facing home-grown problems including weakening investment, excess production, and structural bottlenecks, the report said.

Africa remains a bright spot, despite numerous challenges including conflicts, with the U.N. forecasting only a slight drop in economic growth from 5 percent in 2012 to 4.8 percent in 2013.

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