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OECD chops growth forecasts as eurozone crimps recovery

The Eurozone logo/FILE

The Eurozone logo/FILE

PARIS, September 15- Sickly eurozone recovery is a drag on the outlook for the global economy, the OECD warned on Monday as it cut growth forecasts for most major advanced economies.

The sluggish recovery is also at risk from increased tension over conflicts in Ukraine and the Middle East, and uncertainty over the future of Scotland, the Organisation for Economic Cooperation and Development said.

“Continued slow growth in the euro area is the most worrying feature of the projections,” the OECD said, as it updated its forecasts for major economies.

It chopped by a third its 2014 forecast to 0.8 percent from the 1.2 percent expansion it had projected in May.

While it said the moderate US economic expansion remains broadly on track, the OECD cut the 2014 forecast by a fifth to 2.1 percent from 2.6 percent.

Japan’s forecast was cut by a quarter, to 0.9 percent from 1.2 percent, although the OECD said it expected the underlying recovery in the economy to reassert itself following the dent to growth caused by an April sales tax increase.

The OECD did not provide an update to its forecast for global growth this year, which it forecast at 3.4 percent in May.

Among the major emerging economies which are not OECD members, China’s forecast was held steady at 7.4 percent. It said the world’s number two economy “has so far managed to achieve an orderly growth slowdown to more sustainable rates.”

It slashed the forecast to Brazil to 0.3 percent growth in 2014 from 1.8 percent after the country fell into recession in the first half of this year.

India was the sole gainer, with the OECD lifting its forecast to 5.7 percent from 4.9 percent thanks to a boost of confidence in the country that the new government will pursue growth-oriented reforms and progress in containing inflation.

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