April 20, 2024

High Unemployment ‘Most Pressing Legacy’ of Financial Crisis, Report Says

PARIS — The world economy is moving into a self-sustaining recovery, but high unemployment remains a threat three years after the financial crisis, a prominent economic research organization said Wednesday.

“The global recovery is getting stronger, more broad-based, more self-sustained,” Pier Carlo Padoan, the chief economist at the Organization for Economic Cooperation and Development, said.

“The private sector is driving growth,” he added, “especially through a pick-up in trade,” while at the same time, support through government spending programs “is being withdrawn slowly.”

The O.E.C.D. represents 34 leading developed economies, including the United States and the other members of the Group of 7 industrialized nations. The Paris-based organization is marking its 50th anniversary this week, with the celebration timed to overlap with a Group of 8 summit meeting taking place in Deauville, France, on Thursday and Friday.

In its Economic Outlook report, the O.E.C.D. said global gross domestic product will likely grow by a healthy 4.2 percent this year and by 4.6 percent in 2012. But that figure reflects strong growth in emerging economies; O.E.C.D. members’ G.D.P. is expected to rise by a more modest 2.3 percent in 2011 and by 2.8 percent next year.

The organization forecast U.S. growth of 2.6 percent this year and 3.1 percent in 2012. It said it expected the euro-zone economy to expand by 2 percent in both 2011 and 2012. Japan’s economy, hurt by the March 11 earthquake and tsunami, will likely shrink by 0.9 percent this year before rebounding to 2.2 percent growth in 2012, the O.E.C.D. said.

Still, it noted, “high unemployment remains among the most pressing legacies of the crisis,” and that “should prompt countries to improve labor market policies that boost job creation and prevent today’s high joblessness from becoming permanent.”

Unemployment, which affects more than 50 million people in the O.E.C.D. area, is an important political consideration, as evidenced by recent demonstrations in Spain, which, with more than 20 percent of the population out of work, has the highest jobless rate in the European Union.

The O.E.C.D. called on governments to provide appropriate employment services and training programs and to encourage temporary work, while considering employment tax cuts and workshare arrangements.

Angel Gurria, the O.E.C.D.’s secretary general, called in a statement for governments to work toward fiscal consolidation, noting that government debt is expected to rise to an average of 96 percent of G.D.P. in the euro zone this year, and to just over 100 percent of G.D.P. in the overall O.E.C.D.

Mr. Padoan, the chief economist, warned that there remained a number of downside risks for the global economy, including high energy and commodity prices, a slowdown in China caused by the government’s efforts to fight high inflation, and the crisis among the euro states.

“There is a concern that these downside risks could accumulate and possibly prompt some stagflationary risks in some advanced economies,” he added.

Article source: http://feeds.nytimes.com/click.phdo?i=263b53f2f4b0e822bbcbb83f63b3a2f4

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