OECD gloomily cuts global growth outlook to 3.1%

The Organisation for Economic Cooperation and Development (OECD) predicts the recession-hit eurozone will fall further casting a shadow over the improving US and rebounding Japan.

The leading economic think tank says, the world economy should
grow 3.1 percent this year and then accelerate to 4 percent in
2014. That’s a more pessimistic outlook than its 3.4 percent
forecast in November.

The euro zone will remain the drag on global growth. The OECD
sees its economy remaining in recession for a second year,
contracting 0.6 percent. The growth may resume next year at 1.1

The OECD’s chief economist, Pier Carlo Padoan called on countries
to cooperate to facilitate growth: “While still disappointing,
the global economy is moving forward, and it is doing so at
multiple speeds. These multiple speeds reflect different paths
towards self-sustained growth, with each path carrying its own
mix of risks.”

The grim outlook for Europe contrasts with the forecast for the
US, which is expected to grow almost 3 percent next year. The
organization has praised Washington’s successful
re-capitalisation of its banks that helped revive the economy.

“In the United States, the combination of a repaired financial
system and a revival in confidence is driving growth. Private
sector demand is stabilising as household de-leveraging is far
advanced, house prices are rebounding and wealth accumulation is
supporting consumption. Employment is growing, adding to
Pier Carlo Padoan says. However, he criticized
the US Congress decision to impose public spending cuts, a
so-called sequester, before the recovery firms up.

The think tank has slashed its forecast on China cutting growth
rates to 7.8 percent this year from a previous 8.5 percent.

The OECD has lifted its estimate for Japan, saying the BOJ
aggressive monetary stimulus would help its economy grow by 1.6
percent this year. It has blessed the country’s central bank’s
policy and said further moves could be used to boost the economy.

The OECD said central banks of most countries in recovery mode
should also keep monetary policies easy. It has called on the
European Central Bank to dramatically step up its efforts to get
credit flowing to the economy.

This article originally appeared on: RT