The global economy is showing stability, but it’s to early to relax. According to OECD latest Outlook, despite the growth in the first quarter of 2014, big players in the global economy have to put further efforts into unemployment reduction and address other legacies from the crisis.
There is a positive forecast for Euro, where OECD prdicts positive growth after three years of contraction. As for the United States, an economic growth by 2.6% in 2014 and 3.5% in 2015 is projected. China’s economy will grow around 5.5% average in the next two years.
Advanced economies seem to be on the right track, but there are still risks for the emerging markets as tighter credit and supply side bottlenecks are damping growth.
More than 44 million people are projected to still be out of work across the OECD area at end-2015. This is still an notable fall from the historic levels of unemployment rate seen during the crisis. Anyhow, there will be 11.5 million more people without jobs, than before crisis by the end of 2015
There is a number of recommendations that OECD gives:
1. Monetary policy needs to remain accommodative in the euro area and in Japan
2. In the US, where the recovery is more firmly based, asset purchases by the Federal Reserve should be gradually phased out during 2014 and policy rates should start to be raised during 2015
3. Improve the health of the banking sector, complete the establishment of a fully-fledged banking union in EU
With an relatively stable economic growth globally, there is a gap between the growth pace in advanced and emerging markets. It is important to balance this this pace by creating more jobs, developing new trade opportunities and implementing ambitious structural reform programs.
by Anna Astvatsatryan for MichaelCzinkota.com
Resource: OECD Economic Outlook, May 2014