The Organization for Economic Cooperation and Development cut its growth forecasts, warned of the risk of a “major” global recession and urged the European Central Bank and the People’s Bank of China to ease monetary policy.
“After five years of crisis, the global economy is weakening again,” OECD Chief Economist Pier Carlo Padoan said today in the organization’s semi-annual Economic Outlook. “The risk of a major contraction cannot be ruled out.”
The 34-member OECD countries combined will grow 1.4 percent this year and next, less than the 1.6 percent and 2.2 percent predicted in June. The group will grow 2.3 percent in 2014, with expansions of 2.8 percent in the U.S. and 1.3 percent in the euro region, the OECD said in its first forecast for that year.
Similarly, Italy needs to uphold Prime Minister Mario Monti’s pledge to shore up public finances and overhaul the country’s economy to prompt a return to growth and enjoy investor confidence after next year’s elections, the OECD said. Italian GDP is set to shrink 2.2 percent this year and 1 percent next year, according to the report.