The global economic recovery is slowing at a sharper rate than had been expected, according to the OECD.
The Paris-based economic forum has forecast that growth in the G7 group of the world’s leading economies will shrink to 1.4 percent in the third quarter, down from 2.5 percent in the previous three months. Fourth quarter growth will fall again to one percent amid low consumer confidence.
Pier-Carlo Padoan, chief economist at the Organisation for Economic Cooperation and Development said.
“There are a number of weaknesses which weigh particularly on household behaviour…One is that the housing market has lost momentum, meaning that it’s not clear what the dynamic of house prices will be. The other element which weighs negatively on households is the unemployment situation.”
The OECD added that it is not clear whether the slowdown is temporary or longer-term.
If economic weaknesses do turn out to be more deep-rooted, the group advises governments to extend and even step up stimulus measures in the form of quantative easing and committing to close-to-zero interest rates.