OECD forecasts lower global economic growth
November 20, 2013, 5:51 am

Unemployment remains a hindrance to economic recovery in Europe, particularly in Spain, where more than one in four are jobless [Getty Images]

In its report released on Tuesday, the OECD said that global GDP growth for 2013 is 2.7 percent, down from 3.1 per cent.

In 2014, global economic growth is likely to be 3.6 per cent, down from 4 per cent from its previous projection just six months ago.

The economy of the 17-nation eurozone, it says, will grow at just 1 per cent next year, whereas GDP growth in the US will be 2.9 per cent. In the 34-nation OECD, growth for 2014 is forecast at 1.2 per cent.

The OECD report blames high unemployment rates in many of the eurozone countries for the sluggish growth rate.

The report blamed slower than expected economic growth in emerging markets for the eurozone’s poor performance. However, it said that emerging markets were clearly affected by the Federal Reserve’s initial plans to taper the $85-billion stimulus programme which began in 2009.

The OECD urged the Federal Reserve to maintain the stimulus programme in order to combat market instability.

The OECD also took a strong position against the US government shutdown in early October which had been prompted by partisan bickering over fiscal policy. It also warned that that an upcoming debt deadline in the US could further hamper not only US economic recovery but growth in global markets as well.

The OECD report comes following consistent published data from the IMF, EU and the World Bank, which indicates that Europe has yet to stabilise its recovery from recession.

In January, for example, the European Commission’s office for Employment, Social Affairs and Inclusion released a report that indicated unemployment in some countries has reached record levels with nearly 19 million people jobless in the eurozone.

In early November, the European Union’s Statistical Agency (EUROSTAT) published data which showed that, nearly 25 per cent of young people aged 15 to 24 in the EU are without a job, which is more than double the unemployment rate among adults.

Income inequality has increased in past decades in many OECD countries and is also on the rise in many others, the IMF warned earlier in the year. The challenges of growth, job creation and social inclusion are closely linked, it said.

Growth is an essential prerequisite for job creation and social cohesion. In turn, jobs and increased labor force participation, including among women, are important to foster inclusive growth and reduce poverty and income inequality, said the Washington-based global lender.

Source: Agencies