Brussels, 28/04/2003 (Agence Europe) - In its most recent Economic Outlook", published last week, the Organisation for Economic Cooperation and Development (OECD) suggests the global recovery will be progressive, picking up only later in the year and accelerating in 2004. "Despite the prevailing uncertainties and the current weakness in activity, this Outlook still sees a progressive if unspectacular world recovery as the most likely scenario. While a relapse into recession cannot be totally ruled out, it remains a low-probability outcome", notes the OECD's Chief Economist Jean-Philippe Cotis in the report's editorial.
The OECD projects that this slow global growth will be of the order of 2.5% in the United States in 2003 (little more than the 2002 figure of 2.4%), rising to 4.0% in 2004. Growth of only 1.0% is forecast for the eurozone in 2003 (following 0.9% in 2002, rising to 2.4% in 2004). Japan will continue to recover with growth rising from 0.3% in 2002 to 1.0% in 2003, not rising above 1.1% in 2004. The OECD expects household consumption to be affected by deterioration in the job market with unemployment rising from 6.9% in 2002 to 7.2% of the working population in 2003 across the OECD countries, rising to 8.8% in the eurozone (compared with 8.2% in 2002).
OECD counts on ECB cutting rates by 50 base points
The OECD experts believe that current macroeconomic policies "remain accommodating enough to support an incipient recovery". There is little budgetary room for manoeuvre, with public deficits averaging 3.5% forecast for 2003 in the 29 OECD countries. "Monetary policy is best-placed to steer the recovery. While, at present, monetary conditions appear well-adapted to the conjectural situation in the US, there is a case for a significant easing in the euro area, where growth may remain below potential during the next few quarters, while core inflation is decelerating". The OECD incorporates a 50 base point cut in its overall outlook.