The global economy has embarked on a fragile recovery, which might be derailed by the crisis hovering over the eurozone, warned the Organization for Economic Co-operation and Development (OECD) on Tuesday.
In its latest economic outlook, the Paris-based organization pointed out that regions have been recovering at different speed worldwide, with the United States and Japan taking lead over the sluggish euro area, while large emerging economies saw a moderate upswing. Gross Domestic Product (GDP) growth across the OECD is projected to slow from an annual rate of 1.8 percent in 2011 to 1.6 percent in 2012, before recovering to 2.2 percent in 2013, according to the outlook. Meanwhile, the organization forecast a mild recession in the eurozone this year, with GDP growth rate declined by 0.1 percent before rebound to 0.9 percent in 2013. "The crisis in the euro zone remains the single biggest downside risk facing the global outlook," said OECD chief economist Pier Carlo Padoan. "We need a euro area compact with 3 main goals: to avoid downside scenario, create sustained growth, build or rebuild monetary union ... ," Padoan told a press conference at the launching of the biannual report. The report found that business and household confidence is rising in the United States, flat in Japan, but weak or even falling in Europe where financial markets are tight and the adverse impacts of fiscal consolidation on near-term growth may be significant, particularly in countries hardest hit by the euro crisis. Similar trends were seen in labor markets, as unemployment is edging down in the United States, but rising in Europe, said the report. A downside scenario may materialize and spill over outside the euro area with very serious consequences for the global economy, the OECD warned. "The global economic outlook is still cloudy," said OECD Secretary-General Angel Gurria, adding that "the global economic recovery is weak, considerable downside risks remain and sizeable imbalances remain to be addressed." "We need decisive policy action now," the OECD chief stressed, urging government leaders to find new approaches to pave ways for economic growth by "go structural, go social, go green" to foster an inclusive society and promote social equity as "these structural reforms are not only good at creating growth, they can help address the problem of income inequality." The OECD offered its menus on stimulating growth to leaders attending a European Union summit in Brussels on May 23 which include comprehensive structural reforms in areas such as education, innovation, competition and green growth. VietNamNet/Xinhuanet
