Emerging economies likely to hold back global growth: OECD

March 11, 2014
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 Emerging economies likely to hold back global growth/AFP
Emerging economies likely to hold back global growth/AFP

, PARIS, March 11- Emerging economies are expected to hold down global growth with their “sub par” performance, the OECD forecast on Tuesday, warning that the risk of recent turmoil hitting developing markets could intensify.

But advanced economies are expected to post strengthening growth, although at a slower pace in the first half of 2014 than in the second half of last year.

“The pick up in growth in major advanced economies has been reflected in an acceleration of world trade volumes, after an extended period of unusually sluggish growth,” the organisation said.

“This may signal a rebound in business investment, which has also been weak in recent years, as investment is relatively trade intensive,” it added.

However, the good news from the developed world is being offset by a slowdown in emerging economies, some of which have seen massive capital outflows as the United States began to “taper” its $85 billion a month stimulus programme.

“Given that emerging economies now account for over half the world economy, continued sub par economic performance for several of the major emerging market economies is likely to mean that global growth remains only moderate in the near term,” said the OECD.

As the US continues to scale down its easy money policy, “there remains a risk that the financial market volatility and strong capital outflows in recent months in some emerging economies could again intensify, exerting an additional drag on growth”.

“High levels of debt built up during recent years increase the vulnerability to financial shocks,” it said.

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