Pace of recovery slowing, says OECD. Hopes for a rapid rebound in the global economy receive another blow in the latest OECD economic update. It suggests that the pace of economic recovery is slowing, and by more than had previously been expected. But although the situation is extremely uncertain, fears of a double-dip recession look to be misplaced. “The uncertainty is caused by a combination of both positive and negative factors,” OECD Chief Economist Pier Carlo Padoan said at the launch of the Interim Assessment in Paris this morning. “But it is unlikely that we are heading into another downturn.”
Those negatives include the possibility that consumers will continue to keep a tight hold on their purse strings, so reducing demand in the economy. The reasons for that vary: some people may be paying off debts while others may put off spending because of unemployment, or the fear of losing their job, and concerns over continued weakness in house prices. On the plus side, the OECD says corporate profits are “robust” and that levels of private investment are so low they can probably now only go in one direction – up. (A decline would take even more steam from the economy.)
The OECD also believes that the worst of the turmoil on financial markets may now be over, although risks remain, and notes that emerging economies like China and India are doing well, which should benefit the wider global economy. As for the hard numbers, the OECD sees the pace of economic growth slowing over the course of this year in the G7 countries. It cites GDP growth of 3.2% in the first three months of 2010 and 2.5% in the second quarter, and forecasts falls to 1.4% in the third quarter and just 1% in the fourth.
Useful links OECD work on economics
Insights: From Crisis to Recovery