OECD cut 2014 global GDP forecast
The Organisation for Economic Co-operation and Development (OECD) released its updated growth forecasts on Tuesday, lowering the forecasts for global 2014 GDP rom the 4% seen in May to 3.6%. The outlook for the global economy has darkened as the prospects for emerging markets deteriorate and the United States approaches another potentially catastrophic debt deadline, OECD explained.
"We've lowered our forecasts for many reasons, but the most important one is the downgrade in growth in the emerging countries," OECD chief economist Pier Carlo Padoan explained. He added that the economic troubles of these markets could also affect the advanced economies, especially the eurozone and Japan.
The Paris-based thinktank believes the ECB should ease its monetary policy further, because the recovery in the region is “lagging and uneven”. Problems of high unemployment, subdued inflation outlook and weak banking system persist. Eurozone 2014 GDP forecast was lowered from 1.1% to 1.0%. Interesting to note that German GDP forecast was lowered from 1.9% to 1.7%, while French - raised from 0.8% to 1.0%.
The OECB also pointed to the uncertainty surrounding the US fiscal policy as one of the major risks for the global economy and urged the Federal Reserve to maintain an accommodative stance for some more time. The OECD also called for abolishing the US debt ceiling and devising a "credible long-term budgetary consolidation plan with solid political support." However, the US 2014 GDP forecast was raised from 2.8% to 2.9%.
Things are not all that bad in the Great Britain. The OECD has revised up its UK 2014 forecasts made in May from 1.5% to 2.4%, predicting that stronger investment and household spending will drive faster growth. The projection for Japan was also raised from 1.4% to 1.5% in 2014. The thinktank has also become more optimistic on China's prospects which is seen successfully adjusting its policy to the changing economic environment. However, the country's 2014 GDP forecast was cut from 8.4% in May to 8.2%.