OECD: Concern for global economic growth, jobs (Roundup)

Nov 18, 2010, 14:21 GMT

Paris - Global economic activity is slower than expected, the Organisation for Economic Cooperation and Development said Thursday in its half-yearly report, citing sovereign debt problems, trade imbalances and weak job growth.

China was set to lead the world, with 9.7 per cent economic expansion predicted for next year and 2012. Growth in some emerging powerhouses, including Brazil and India, would be tempered, though, going ahead.

The 33 OECD countries would see growth of 2.3 per cent next year, as against the organisation's previous estimate issued last June of 2.8 per cent.

The think-tank of the industrialized countries said it expected global economic growth to stand next year at 4.2 per cent, a downgrade from the previous estimate of 4.5 per cent.

Global imbalances would remain 'wide' the OECD predicted, warning that countries' policies should be well coordinated at an international level to improve economic prospects.

The recommendation for more coordination came on the heels of the recent G20 meeting in Seoul, where major economies battled to reach an agreement on overcoming currency conflicts and trade imbalances.

A major concern remained jobs, as unemployment rates in the industrialized world were not expected to significantly drop in the coming two years. Unemployment for the OECD zone is likely to remain above an 8 per cent average until 2012.

One of the key issues hampering a stronger recovery was a weak housing market, particularly in the countries hardest hit by a wave of foreclosures, including the United States.

US growth in 2011 is now projected at 2.2 per cent, sharply down from the OECD's last projection of 3.2 per cent. In 2012, the world's largest economy was expected to expand by 3.1 per cent.

Japan would also be a weak performer. Like the Eurozone, Tokyo was expected to report 1.7 per cent growth next year. But while the Europeans would rebound to 2 per cent in 2012, the Japanese would see growth slip to 1.3 per cent.

Germany, Europe's powerhouse, was performing better than its European peers, and the OECD raised its forecast to 3.5 per cent this year and 2.5 per cent in 2011.

The eurozone group's economic rise next year was down a fraction, at 1.7 per cent, from the last estimate of 1.8 per cent.

Given the soft outlook for 2011, the OECD said expansionary monetary policy would likely continue to be a major factor in the developed world in the coming months.