Better view for US, eurozone
By Frank Jordans |
May 26, 2011, Thursday
|
Print Edition
Print Edition
PROSPECTS for economic growth in the United States and the eurozone have improved and are predicted to hit 2.6 percent and 2 percent this year, the Organization for Economic Cooperation and Development said yesterday.
Overall forecasts for real gross domestic product growth in the OECD's 34 member states, comprising most of the world's major economies, remained steady at 2.3 percent in 2011.
Japan stands out negatively. Its economy is now predicted to contract by 0.9 percent because of the March earthquake that devastated hundreds of homes and businesses along the northeast coast.
The Paris-based OECD had predicted last November that real GDP in Japan would grow at a modest 1.7 percent, on a par with the eurozone, and that the United States would expand by 2.2 percent.
Global growth is now seen at 4.25 percent and 4.5 percent this year.
Whether this will translate into genuine improvements in living standards is unclear. The OECD has acknowledged that GDP is a limited gauge which doesn't reflect many changes in quality of life. Earlier this week the OECD launched a separate index to measure people's expectations and governments' abilities to meet them.
But the OECD said it would cling to GDP as a key measure of the speed, if not direction, of the global economy for the foreseeable future.
The OECD said the biggest risks stem from a fresh jump in oil prices due to political unrest in the Middle East, disruption of the global manufacturing chain due to Japan's earthquake, and the possibility of a sharper than predicted slowdown in China if the country's efforts to stem inflation strangle lending.
China isn't an OECD member but the group examines its economy anyway because of the country's growing economic clout.
Cutting government debt should be a priority in the coming months, the OECD said, citing the US and Japan. "In some countries this will require unblocking political stalemate that makes fiscal policy unpredictable over both short and long horizons."
Overall forecasts for real gross domestic product growth in the OECD's 34 member states, comprising most of the world's major economies, remained steady at 2.3 percent in 2011.
Japan stands out negatively. Its economy is now predicted to contract by 0.9 percent because of the March earthquake that devastated hundreds of homes and businesses along the northeast coast.
The Paris-based OECD had predicted last November that real GDP in Japan would grow at a modest 1.7 percent, on a par with the eurozone, and that the United States would expand by 2.2 percent.
Global growth is now seen at 4.25 percent and 4.5 percent this year.
Whether this will translate into genuine improvements in living standards is unclear. The OECD has acknowledged that GDP is a limited gauge which doesn't reflect many changes in quality of life. Earlier this week the OECD launched a separate index to measure people's expectations and governments' abilities to meet them.
But the OECD said it would cling to GDP as a key measure of the speed, if not direction, of the global economy for the foreseeable future.
The OECD said the biggest risks stem from a fresh jump in oil prices due to political unrest in the Middle East, disruption of the global manufacturing chain due to Japan's earthquake, and the possibility of a sharper than predicted slowdown in China if the country's efforts to stem inflation strangle lending.
China isn't an OECD member but the group examines its economy anyway because of the country's growing economic clout.
Cutting government debt should be a priority in the coming months, the OECD said, citing the US and Japan. "In some countries this will require unblocking political stalemate that makes fiscal policy unpredictable over both short and long horizons."
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