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OECD cuts global growth forecast on China slowdown

  • Associated Press
  • May 6, 2014 - 4:10 AM

PARIS — A leading international organization warned Tuesday that the global economy will grow by less than expected this year after it lowered its forecasts for the United States and China.

The Paris-based Organization for Economic Cooperation and Development said the global economy will grow by 3.4 percent this year, down from its forecast of 3.6 percent growth last November.

The OECD, a think tank for the world's most developed countries, cut China's growth forecast this year to 7.4 percent from 8.2 percent in November. Meanwhile, the U.S. economy is forecast to grow 2.6 percent this year against last November's 2.9 percent estimate.

In its half-yearly economic outlook, the OECD also cut its 2014 forecast for Japan, to 1.2 percent from 1.5 percent. However, it raised its growth forecast for the 18-country eurozone to 1.2 percent from 1.0 percent.

The OECD warned that "financial tensions in emerging markets are one risk that could blow the global recovery off course," while falling inflation in the euro area was another cause for concern.

The body urged central banks in the main OECD areas to keep monetary policy "accommodative," given stubbornly high unemployment, below-target inflation and high levels of government debt.

In particular it called on the European Central Bank to act decisively to lift inflation and to be prepared to take "non-conventional stimulus" measures if needed.

© 2014 Star Tribune