Economy

OECD predicts global output to grow 4.6% over 2010

(Xinhua)
Updated: 2010-11-19 13:57

PARIS -?Global output is expected to grow 4.6 percent in 2010 in the context of continuing but tepid recovery, according to an economic outlook report issued by the Paris-based Organization for Economic Cooperation and Development (OECD) on Thursday.

The outlook report foresees around 4.2-percent growth in global gross domestic product (GDP) in 2011 and then another 4.6-percent increase in 2012, which continue to be led by non-OECD economies.

Soft output and trade growth since early 2010 along with widespread fiscal consolidation formed the backdrop of slack activity in OECD economies over near-term, while emerging economies slightly slowed their growing pace, the organization said.

As to unemployment troubling many OECD economies, the report indicated it would decline moderately from 8.3 percent in end of 2010 to around 7.3 percent by the end of 2012.

Though jobless rate remains high above the pre-crisis rate of over 5.5 percent in OECD, the report showed positive signals: more sustainable growth in emerging countries, stabilized inflation at low rate in advanced members and strong domestic demand outside OECD.

"As financial markets continue to normalize, and households and firms reduce their indebtedness, growth is projected to gradually strengthen in the OECD area in 2011-12," ,Pier Carlo Padoan, OECD chief economist,?said in the editorial preface of the report.

The organization provided an estimation of 2.8 percent growth in 2010 for its own area, followed by 2.3 percent increase in 2011 and 2.8 percent in 2012.

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For euro zone as a whole, it predicts 1.7 percent and 2.0 percent respectively in 2011 and 2012.

Warning risks of public debt sustainability in some members and the adverse effect of capital flows from low-interest rate countries to many emerging economies, the report pointed out limited effect of monetary policies as the quantitative easing.

"Monetary policy can not offset short-term negative effects of austerity measures, although the quantitative easing may in some cases, provide an additional incentive," Padoan argued, saying a very low interest rates in some countries must return to normal gradually.

There are internal-links among risks like fragile financial markets, sovereignty debt crisis, weak household consumption and tension in currency markets, according to the report, which conclusively called for international coordination and cooperation in an effort to stabilize financial markets and avoid protectionism.