OECD cuts 2014 growth forecast for advanced economies

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The major global economies are losing steam, and are expected to forfeit some 2014 growth, the OECD said Monday. They are weighed down by a sluggish eurozone economy, growing Middle East tension, the Ukraine crisis, and the Scot’s independence referendum.

The global economies are growing unevenly and just marginally,
with the number of jobless remaining far too high in the main
advanced economies, said the Organization for Economic Co –
operation and Development (OECD) in its latest report.

It has put eurozone GDP growth down to 0.8 percent in 2014 from
the previous 1.2 percent outlook made in May. Next year, the
think tank expects the eurozone to grow 1.1 percent, also down
from the 1.7 percent May forecast.

The US is likely to grow by 2.1 per cent this year and Canada’s
growth is estimated at 2.3 per cent this year and 2.7 per cent in
2015.

Forecast for the UK is higher, projected at 3.1 per cent in 2014
and 2.8 per cent in 2015.

“Geopolitical risks have grown in recent months, with an
intensification of conflicts in Ukraine and the Middle East, and
increasing uncertainty about the outcome of the referendum on
Scottish independence,” were highlighted by the OECD ahead
of the Scottish referendum on Thursday.

The Paris-based OECD believes the slow growth in the euro area to
be the “most worrying feature” of its Interim Economic
Assessment forecast, recommending more monetary support for the
euro area, like embarking on the path of full-scale quantitative
easing (QE), otherwise the eurozone “runs the risk of
prolonged stagnation.”

This monetary policy might potentially involve the European
Central Bank purchasing government debt.

“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 think tank said. “Recent actions by the
European Central Bank are welcome, but further measures,
including quantitative easing, are warranted. Given the weakness
of demand, European countries should also use the full degree of
flexibility available within the EU’s fiscal rules.”

Quantitative easing is a monetary policy that stimulates an
economy through zero or near-so interest rates, and priming it
with cash through bond purchases.

Article source: http://rt.com/business/187868-oecd-growth-forecast-slashed/