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OECD cuts eurozone growth forecasts | |
(39 minutes later) | |
The OECD has again cut its growth forecasts for the eurozone and called on the European Central Bank to consider doing more to boost growth. | |
The organisation said the eurozone will shrink by 0.6% this year, widening the gap between it and faster-growing economies such as the US and Japan. | |
It said the global economy was moving forward "at multiple speeds". | |
The UK is forecast to grow at 0.8% this year and 1.5% next year, despite the economy facing "strong headwinds". | |
The forecasts came in the OECD's twice-yearly Economic Outlook publication. | The forecasts came in the OECD's twice-yearly Economic Outlook publication. |
The organisation, which represents 34 advanced economies, forecast average growth across them of 1.2% this year and 2.3% in 2014. | |
Austerity effect | Austerity effect |
In the UK, it said the government's austerity plans had affected growth, but said the measures were "necessary" and warned that "further fiscal consolidation" was needed. | |
The organisation painted a troubled picture of the eurozone economy. | |
It blamed austerity measures, weak confidence and tight credit conditions. It hinted that the European Central Bank (ECB) might want to expand quantitative easing (QE) as a measure to encourage stronger growth. | |
It warned the continuing weakness in Europe "could evolve into stagnation, with negative implications for the global economy". | |
In contrast, it said the pace of QE in the United States, where growth of nearly 2% is forecast for this year, might need to be "gradually reduced". | |
Japan is forecast to have the strongest growth of the major OECD economies this year, adding 1.6% to its GDP on the back of extraordinary economic stimulus measures introduced by the government this year. | Japan is forecast to have the strongest growth of the major OECD economies this year, adding 1.6% to its GDP on the back of extraordinary economic stimulus measures introduced by the government this year. |
But the OECD said there was considerable uncertainty over whether that recovery would continue into 2014, when the government is expected to cut spending. | But the OECD said there was considerable uncertainty over whether that recovery would continue into 2014, when the government is expected to cut spending. |
China is not included in the OECD club, but the organisation expects its annual growth to be about 8% over the next two years. |