Fragile global economic recovery calls for further fiscal consolidation: OECD

08:04, November 04, 2010      

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The global economic recovery remained fragile but was broadly on track, the Paris-based Organization for Economic Cooperation and Development (OECD) said Wednesday, calling on governments to push further fiscal consolidation.

Recovery pace across the world had slowed with softened output and trade growth since earlier in 2010, OECD chief economist Pier Carlo Padoan told a news conference, call to present a brief economic outlook ahead of the G20 summit.

He said the latest OECD findings predicted annual growth for 2010 in OECD countries of between 2.5 percent and 3 percent, which would decelerate to 2-2.5 percent in 2011 before recovering to 2.5-3 percent in 2012.

Varied activity would be reflected across member countries, the OECD report said, with the U.S. "expected to gain considerable momentum in 2012," while Japan would lose some steam in recovery.

"In many emerging market economies, growth is continuing robustly," but at a slower pace, its report added.

While not significantly better, the report nevertheless confirmed the figures were "a bit better" than previous predictions in September.

"Labour market conditions have begun to improve this year in most OECD countries," said Secretary-General Angel Gurria, who was also at the presentation. "Consumption is doing better, trade ... holding up," Padoan added.

However, Gurria was even stronger in outlining the importance of fiscal consolidation. "What we are talking about is ... simply to stabilize debt to GDP. In many of the countries, it means an unprecedented consolidation effort ... only to get to the point where the debt to the GDP ratio stops growing."

Gurria stressed the 6-to-9-percent commitment of public deficit to GDP ratio announced by several countries would just be the beginning, because after stabilizing, "when you want (the debt) to go down, you need to go further."

Comprehensively taking fiscal, structural, financial and monetary instruments into account, policymakers were called on by the advisory agency to take urgent coordinated, coherent and growth-friendly economic and political policies.

"With recovery, there is transformation ... The post-crisis period is like a cutthroat (competition) period. It's going to be a very competitive and tough period," Gurria warned.

Source: Xinhua


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