When the U.S. and Europe to Stop Easing Monetary Policy
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Paris-based Organization for Economic Cooperation and Development (OECD) Economic Outlook released 3 reports that, given the slowdown in the pace of global economic recovery and the majority of OECD countries, high public debt, the relevant government should work to balance the economic recovery and fiscal consolidation.
Pierre Carlo Padoan, chief economist at the OECD published the report in particular pointed out that the U.S. and eurozone economic growth fragile, lower inflation expectations, expected in the first half of 2012 these countries will maintain the current interest rate policy. But if the decline in economic growth, loose monetary policy in these countries to implement the time will be extended accordingly.
Balance of economic recovery
Padoan said the global economy onto a recovery track, the consumer has been restored, business inventories and investment is also increasing. However, as the effectiveness of fiscal stimulus faded, slowing growth in production and trade, the OECD lowered its forecasts for its member economies. The report predicts that average GDP of OECD member countries in 2010 increased by 2.5% to 3%, up 2% in 2011 to 2.5% in 2012 increased by 2.5% to 3%. The end of May this year, the OECD has predicted that average economic growth of member countries are expected to reach 2.7% this year, and in 2011 rose slightly to 2.8%.
Padoan pointed out that worldwide, the recovery of the imbalance further. The current economic situation in the euro area improved a lot over the first half, but the pace of recovery in different countries. The United States needs to wait until 2012 to see a clear recovery trend, while Japan's recovery will be weakened. In contrast, most emerging market countries are still maintaining rapid economic growth, albeit lower than the initial level of global economic recovery.
Padoan said the global economic recovery, risks remain, U.S. home prices may fall further, the possible resurgence of trade protectionism, some European enterprises in the first half of the strong earnings may result in excessive expansion of investment.
Committed to fiscal consolidation
OECD Secretary-General is stressed that the financial crisis caused by high unemployment, a long time is difficult to decline. He recommended that States take to strengthen training, the implementation of structural reforms to reduce employment tax to solve the unemployment problem.
Gurria noted that the international financial and economic crisis caused by a majority of OECD budget deficits and public debt reached unsustainable levels, countries need to make the appropriate fiscal consolidation. He pointed out that the minimum requirements for the current fiscal consolidation is to prevent further growth of the deficit and public debt, and reduce the fiscal deficit ratio and the debt burden ratio greater efforts are needed.
The report notes that the budget for the development of specific regulations and the creation of an independent financial regulatory agencies and other measures would help, and governments should try to, including health, education, innovation and infrastructure areas, including cost savings.
The report notes that most developed countries continued loose monetary policy will lead to capital flows to emerging market countries, cause risk of inflation and asset bubbles, and increase upward pressure on exchange rates. Recent unilateral intervention in the foreign exchange market and the resulting market volatility could trigger a protectionist backlash. Report stresses the need for States on how to reach an agreement to reduce global growth imbalances. |
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By :
Jessie Stone
Submitted
2010-11-10 17:40:57 |
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