27 November 2012 14:08 [Source: ICIS news]
LONDON (ICIS)--Eurozone GDP is likely to contract by 0.1% next year and expand by 1.3% in 2014 as part of a “hesitant” global economic recovery, the Organisation for Economic Co-operation and Development (OECD) said on Tuesday.
According to the international economic organisation’s latest global outlook, a slow global recovery over the next two years is likely to be reversed if the eurozone fails to deal with its ongoing economic crisis. The OECD had predicted in its previous economic outlook in May that eurozone GDP would expand by 0.9% in 2013.
A lack of action by the US government on the “fiscal cliff” of tax increases and budget cuts - set to come into effect at the end of this year - could also undo any hope of a global economic recovery over the next two years, the organisation said.
“The world economy is far from being out of the woods ... governments must act decisively, using all the tools at their disposal to turn confidence around and boost growth and jobs, in the US, in Europe, and elsewhere,” said OECD secretary-general Angel Gurría.
The OECD predicted the eurozone would remain in recession through early 2013, leading to a mild contraction in GDP for the year, before growth picks up in 2014. GDP growth for the OECD’s 34-member countries as a whole is expected to be 1.4% in 2013 and 2.3% in 2014.
The US economy is expected to expand by 2% in 2013 and 2.8% in 2014, provided the fiscal cliff is avoided, while Japanese GDP is expected to grow by 0.7% next year and 0.8% the year after, the OECD said.
Unemployment in the OECD region currently stands at 50 million, and may increase in some countries unless structural measures to boost short-term employment growth are adopted, the organisation added.
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