Thursday, February 18, 2016

Growth: OECD downgraded its outlook – Europe1

The OECD revised sharply downward its growth prospects in the world.

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The fact of the day:. OECD revised sharply downward its growth prospects in the world

the IMF envisaged a risk of “derailment” of the global economy. Today is the Organisation for Economic Cooperation and Development to sound the alarm.
The institution has revised nearly all its growth forecasts downwards. Only those for China this year remained at 6.5%, and India is the only country to see its growth increase, from 7.3% to 7.4%. Now global growth will not exceed in 2016 the level of 2015, 3% (against 3.3% previously envisaged).
In the US, GDP growth will reach more than 2% in 2016, instead of the 2.5% forecast.
the organization is more pessimistic than the Commission, which forecasts that date not yet a fortnight. Where Brussels forecasts growth of 1.7% for the euro area in 2016, the OECD lowered its estimate from 1.8% to 1.4%. Growth in Germany is heavily revised by the multilateral organization (1.3% instead of 1.8% previously estimated). The France pulls out of the game, with a revision of only 0.1% to 1.2%.

The OECD requests emergency stimulus

It is a striking finding of détraquage of the global economy. The oil drop is not good for the global economy, falling wages not mechanically creates jobs and the very low level of interest rates does not lead to investment, devaluation Finally, do not shoot exports seen in Japan. So what to do?

The OECD demand “a strong collective action.” Monetary policy is already very accommodative and is to run its course.
Must now structural reforms that are deployed to bear it. More competition, more flexibility in the labor market ..
Now, notes the OECD, these reforms are slowing. It is also necessary that countries can revive their budget spending. That governments invest in infrastructure. In Europe, the Junker plan must do but it is infinitely slow.
The funniest is that the OECD comes to the aid of a Francois Hollande who sits on the solidarity pact. This is a good point for him but, on the bottom, a fact that does not help: the world economy is very poor

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