By Vivienne Russell | 19 November 2013
The global economic recovery is real but happening only slowly, the Organisation for Economic Co-operation and Development said today as it revised down its growth forecast.
Growth across the world is predicted to be 2.7% this year, before accelerating to 3.6% in 2014 and 3.9% in 2015. However, this is a weaker pace of recovery than that outlined by the OECD in May and is explained by a worsening outlook in some emerging economies.
OECD secretary general Angel Gurría said: ‘The recovery is real, but at a slow speed, and there may be turbulence on the horizon.
‘There is a risk of another bout of brinkmanship in the US, and there is also a risk that tapering of asset purchases by the US Federal Reserve could bring a renewed bout of instability. The exit from non-conventional monetary policy will be challenging, but so will action to prevent another flare-up in the euro area and to ensure that Japan’s growth prospects and fiscal targets are achieved.’
Growth across the 34-member OECD is projected to increase from 1.2% this year to 2.3% in 2014 and 2.7% in 2015.
‘Growth in the United States is projected at a 2.9% rate in 2014 and a 3.4% rate in 2015,’ the OECD said.
‘In Japan, gross domestic product is expected to drop to a 1.5% growth rate in 2014 and a 1% rate in 2015. The euro area is expected to witness a gradual recovery, with growth of 1% in 2014 and 1.6% in 2015.’
The European Central Bank’s recent decision to cut interest rates to a record low of 0.25% was welcomed. The OECD added further easing may be require if deflation risks intensify.
It added that expansion in China would remain weaker than previously projected in most other major emerging market economies.
‘A group of emerging OECD member countries – Chile, Turkey, Mexico, Korea and Israel – will continue out-pacing growth in other advanced economies.’
OECD chief economist Pier Carlo Padoan observed: ‘Growth since the global crisis has been uneven and hesitant, while job creation has been even more disappointing.
‘Clear and credible strategies are needed for how jobs and growth will be created and public finances restored. This will require a strong commitment to structural reforms in advanced and emerging market economies alike.’
