OECD lowers global growth forecast to 3.4% in 2014 amid risks

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The world economy is projected to grow 3.4 per cent this year, lower than earlier expected, with multiple risks including financial tensions in some emerging markets impacting overall prospects, according to OECD.

In its latest economic outlook report, the Paris-based think-tank has trimmed its global growth forecast to 3.4 per cent this year from the previous estimate of 3.6 per cent.

The Organisation for Economic Cooperation and Development (OECD) today said the global economy would strengthen over the next two years, but urgent action is still needed to further cut unemployment and address other legacies from the crisis.

"GDP growth across the 34-member OECD is projected to accelerate to a 2.2 per cent rate in 2014 and 2.8 per cent in 2015...The world economy will grow at a 3.4 per cent rate in 2014 and 3.9 per cent in 2015," the report said.

Even though chances of further major economic disruption have receded, OECD cautioned there are still risks to global economic recovery.

"And while downside risks still dominate, ranging from geopolitical risks in Ukraine and Russia to deflationary pressures in the euro area and to economic and financial tensions in some EMEs (emerging market economies), they now co-exist with upside risks which are stronger than before," the report said.

As per OECD, among the major advanced economies, recovery is best established in the US where growth is expected to be 2.6 per cent this year. It is projected to rise to 3.5 per cent next year.

"The euro area will see a return of positive growth after three years of contraction: 1.2 per cent in 2014 and 1.7 per cent in 2015. In Japan, growth will be dented by the launch of much-needed fiscal consolidation measures, and is expected to hover at 1.2 per cent in 2014 and 2015," it added.

OECD Secretary-General Angel Gurría said advanced economies are gaining momentum and driving the pick-up in global growth, while once-stalled cylinders of the economic engine, like investment and trade, are starting to fire again.

"... With the world still facing persistently high unemployment, countries must do more to enhance resilience, boost inclusiveness and strengthen job creation.

"The time for reforms is now: we need policies that spur growth but at the same time create opportunities for all, ensuring that the benefits of economic activity are broadly shared," he said.

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