OECD Cuts Outlook For Major Developed Nations

(RTTNews) - The Organization for Economic Cooperation and Development on Monday downgraded its growth outlook for major developed nations and urged the European Central Bank to take further steps to boost demand as slow growth in the euro area was the most worrying feature of the projections.

In its interim economic assessment, the OECD said a moderate expansion is underway in most major advanced and emerging economies, but growth remains weak in the euro area.

The OECD projected 0.8 percent growth this year in euro area, down from the 1.2 percent expansion estimated in May. For 2015, growth is estimated at 1.1 percent.

The Paris-based think tank recommended more monetary support for the euro area. Recent actions by the ECB are welcome, but further measures, including quantitative easing, are warranted, it said.

Lowering the projections for the U.S., the lender said the moderate underlying expansion remains broadly on track.

The U.S. economy was forecast to grow 2.1 percent this year instead of 2.6 percent and 3.1 percent in 2015 versus the prior estimate of 3.5 percent. Nonetheless, the OECD said the U.S. is rightly winding down its unconventional monetary easing.

Further, consolidation needs are less pressing, but medium-term consolidation plans are still needed to keep public debt on a sustainable path, it said.

Under the continuing influence of monetary stimulation, Japan was projected to grow 0.9 percent in 2014 and 1.1 percent in 2015. In May, the OECD estimated around 1.2 percent growth for both 2014 and 2015.

The U.K. GDP is projected to grow 3.1 percent in 2014 and 2.8 percent next year.

"The global economy is expanding unevenly, and at only a moderate rate," OECD Deputy Secretary-General and Acting Chief Economist Rintaro Tamaki said.

Germany was projected to grow by 1.5 percent in both 2014 and 2015, France by 0.4 percent in 2014 and 1 percent in 2015. Meanwhile, Italy will see a 0.4 percent drop in 2014 and a gain of just 0.1 percent in 2015, it said. All figures were downwardly revised from May projections.

While the OECD expects faster growth in emerging economies, the forecasts were uneven across countries. China was expected to grow by 7.4 percent in 2014 and 7.3 percent next year.

Policy settings in China are consistent with achieving an orderly growth slowdown, with ebbing inflation pressures providing ample room for stimulus if needed, it said.

India will grow by 5.7 percent in 2014 and 5.9 percent in 2015. The lender said monetary policy needs to remain restrictive.

Brazil will grow by only 0.3 percent this year, having fallen into recession in the first half of the year, and 1.4 percent next, said OECD.