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OECD Report

May 25, 2011

The Organization for Economic Cooperation and Development (OECD) is forecasting continued growth in the eurozone and the US, but an overall global slowdown.

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A euro coin among euro notes
Eurozone countries are looking at a reasonably healthy futureImage: picture-alliance/dpa/DW

"Global growth has picked up since the soft patch in the middle of last year," the OECD said in its latest forecast this week. "However, progress remains uneven across economies."

The Paris-based organization, sees overall gross domestic product (GDP) rising by 4.2 percent by the end of this year, and 4.6 percent by the end of 2012. That is down from the 2010 figure of 4.9 percent.

OECD chief economist Pier Carlo Padoan told reporters that the recovery was "gaining strength" but that there is "no room for complacency."

Japan in recession

Massive pile of debris
Japan's tsunami and earthquake caused more than physical damageImage: AP

While the OECD is predicting growth of two percent for both 2011 and 2012 in eurozone countries, and is forecasting a 2.6 percent increase in GDP for the US, it paints a more troubled picture for Japan.

Falling exports as a result of the March tsunami and earthquake have pushed the country into a trade deficit and seen the economy contract by 0.9 percent. It is expected to bounce back to 2.2 percent growth next year.

"Given the experience of past disasters in Japan and elsewhere, the large negative impact on GDP in the first and second quarters is expected to be reversed quickly as reconstruction efforts get underway," the OECD report said.

Possible risk factors

The European flag flies over the Acropolis in Greece
European debt could weaken recovery from the financial crisisImage: picture alliance / dpa

The report noted a series of factors, including possible hikes in the price of oil and other commodities, slowdown in China, slow recovery in Japan and eurozone debt problems, which suggest that the global economic crisis is not yet over.

"A concern is that if downside risks interact, their cumulative impact could weaken recovery significantly, possibly triggering stagflationary developments in some advanced economies," Padoan warned, in reference to the combination of low economic growth and high levels of inflation.

According to the OECD, the latter is expected to climb to 2.3 percent this year, as compared to the 1.5 percent it forecast at the tail end of last year. The figure is pipped to come down to 1.7 percent next year.

The OECD, which has 34 member states, called on many of them, including the US and Japan, to stabilize debt levels.

Author: Tamsin Walker / dpa / AFP
Editor: Thomas Kohlmann

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