World Economy

OECD Chops Economic Forecasts

OECD Chops Economic ForecastsOECD Chops Economic Forecasts

The market economy group OECD has downgraded its growth forecast for most big economies. Conflicts in Ukraine and the Middle East and the referendum on an independent Scotland are areas of risk and uncertainty, it said.

Its 2014 estimate is a 0.8% increase in the eurozone economy for 2014, compared with a forecast of 1.2% made in May.

The UK’s forecast was cut by 0.1 percentage points to 3.1%. US economic expansion for 2014 was cut to 2.1% from 2.6%. Japan’s forecast was cut to 0.9% from 1.2%.

The OECD did not provide an update to its forecast for global growth for 2014, which it forecast at 3.4% in May. “Continued slow growth in the euro area is the most worrying feature of the projections,” the OECD said.

Among countries which are not OECD members, China’s forecast was unchanged at 7.4%. The OECD said China “has so far managed to achieve an orderly growth slowdown to more sustainable rates”.

India was the only economy to be judged by the organization as likely to grow quicker, with its forecast upgraded to 5.7% from 4.9% after voting in a new government that said it would pursue growth-oriented reforms and progress in containing inflation.

OECD had said on Monday that the European Central Bank should begin large-scale bond buying to ensure that weak price pressures do not further undermine demand in the eurozone.

“A moderate expansion is underway in most major advanced and emerging economies, but growth remains weak in the euro area, which runs the risk of prolonged stagnation if further steps are not taken to boost demand,” OECD report said.

The eurozone, which has 18 member nations, will grow only 0.8 percent, it said, revising downward its previous forecast for an expansion of 1.2 percent. “Given the low-growth outlook and the risk that demand could be further sapped if inflation remains near zero, or even turns negative, the OECD recommends more monetary support for the euro area,” the organization said. “Recent actions by the European Central Bank are welcome, but further measures, including quantitative easing, are warranted.”