A downgrade in the Organisation for Economic Cooperation and Development’s global growth forecast has been accompanied by a warning that the richer nations will increasingly have to drive the recovery.
The think-tank said that was because formerly fast-growing developing economies are now faltering, one reason it sees world growth this year at 3.4 percent, rather than the 3.6 percent of its last forecast.
Angel Gurría, Secretary-General of the OECD said: “We’re still living with the legacies of the crisis, this is the problem. Because what we’re seeing is better numbers, but those downside risks are still there, low growth is still there, very high unemployment numbers are absolutely still there.”
Since the last time the OECD took the temperature of global growth, in November 2013, it has boosted its forecasts for the eurozone and Britain and trimmed those for the United States and emerging-market economies China and Russia.
The forecast was that the US economy, the world’s biggest, would grow 2.6 percent this year. That was down from prediction of 2.9 percent in November, after bad weather caused a rough start to the year.
The UK’s GDP is now seen expanding by 3.2 percent, a big increase from the previous 2.4 percent.
France and Italy get slightly lowered forecasts of 0.9 percent and 0.5 percent respectively.
The euro area may be set to expand by 1.2 percent this year, rather than 1.0 percent, but the OECD thinks the European Central Bank should cut its main interest rate to zero and keep it there for at least 18 months to counter persistently low inflation.
Nothing like that is expected from this week’s ECB policy meeting.