Global economy strengthening
The global economy will strengthen over the coming two years, but urgent action is needed to reduce unemployment and address other legacies from the crisis, according to the latest Economic Outlook report from the OECD.
GDP growth across the 34-member OECD is projected to accelerate to 2.2% in 2014 and 2.8% in 2015, according to the Outlook. The world economy will grow at a 3.4% rate in 2014 and 3.9% in 2015.
Among the major advanced economies, recovery is best established in the US which is projected to grow by 2.6% in 2014 and 3.5% in 2015.
The euro area should see a return of positive growth after three years of contraction: 1.2% in 2014 and 1.7% in 2015.
In Japan, growth is likely to be dented by the launch of fiscal consolidation measures and is expected to hover at 1.2% in 2014 and 2015; while the BRIICS (Brazil, China, India, Indonesia, Russia and South Africa) are projected to see GDP growth of 5.3% this year on average and 5.7% in 2015.
China will again have the fastest growth among these countries, with rates just below 7.5% in 2014 and 2015.
The report draws attention to a range of positive developments as well as significant downside risks as follows:
Investment and trade are both showing signs of picking up but growth will remain moderate by past standards.
Financial conditions are improving in the advanced economies but tighter credit and supply side bottlenecks are damping growth in emerging economies.
Unemployment has begun falling from the historic levels seen in the wake of the crisis, but more than 44 million people are projected to still be out of work across the OECD area at end-2015, 11½ million more than before the crisis.
Launching the report, the OECD’s secretary-general, Angel Gurría, said “Advanced economies are gaining momentum and driving the pick-up in global growth, while once-stalled cylinders of the economic engine, like investment and trade, are starting to fire again.
“But with the world still facing persistently high unemployment, countries must do more to enhance resilience, boost inclusiveness and strengthen job creation.
“The time for reforms is now: we need policies that spur growth but at the same time create opportunities for all, ensuring that the benefits of economic activity are broadly shared.”