Black and working class youth across Britain have taken to the streets to fight police brutality, racism and capitalist exploitation. The Conservative- Liberal Democratic government has failed to meet the needs of the people., a photo by Pan-African News Wire File Photos on Flickr.
September 6, 2012 12:42 pm
OECD slashes short-term eurozone forecasts
By Chris Giles in London
The world economy has slowed alarmingly since the start of the year and will continue to struggle unless significant progress is made in solving the eurozone crisis, the OECD said on Thursday.
In an interim update to its twice-yearly forecasts, the Paris-based international organisation for developed economies, said the eurozone slide into recession was “having an impact worldwide”.
In a significant downgrade of its short-term forecasts, it said the eurozone recession would deepen in the third and fourth quarters of this year, while other G7 countries – the US, Japan, the UK and Canada – would struggle to post anything like their normal growth rates.
Pier Carlo Padoan, the OECD’s chief economist, said: “The slowdown will persist if leaders fail to address the main cause of this deterioration, which is the continuing crisis in the euro area.”
“A number of downside risks threaten the outlook, including the potential for further increases to already high oil prices, excessive fiscal contraction, notably in the United States in 2013, and further declines in consumer confidence linked to persistent unemployment,” he added.
The OECD revised down its forecasts for German growth this year to 0.8 per cent from 1.2 per cent and cut France’s outlook to 0.1 per cent from 0.6 per cent. It slashed Italy’s forecast to a 2.4 per cent contraction, from minus 1.7 per cent.
The OECD forecast showed how world trade had stopped growing, a sign in the past of an impeding global recession, and that unemployment was rising across most of Europe.
Weakness in the eurozone, in particular, was even beginning to hit exports from China, with growth slowing to a crawl.
The OECD recommended that the eurozone had to recognise that creditor countries needed policies to expand rapidly, while debtors should speed up structural reforms and impose wage restraint. It urged the European Central Bank to go ahead with aggressive action in bond markets to help the transition to more balanced eurozone economies and stronger banks.
The OECD did not suggest European fiscal policy should be loosened, however, despite the deeper recession it now expects in the area.