OECD cautions on G7 cuts

RECOVERY in the global economy is slowing faster than expected, dragged down by weaker performances in the world’s seven biggest economies.

If the slowdown continues, the Organisation for Economic Cooperation and Development (OECD), which represents the top 30 economies in the world, said government intervention to boost demand may be necessary in the months ahead. This report is limited to the leading G7 economies where output is set to average an annualised 1.4% in the third quarter and 1% in the fourth, well down from 3.2% and 2.5% in the first and second quarters.

“We’re seeing a slowdown in the recovery which is more or less generalised”, OECD chief economist Pier Carlo Padoan told Reuters. Despite the weaker figures in the major economies, Padoan said he saw no evidence of a reversal into recession by any of the big economies. “We’re not seeing a double-dip now.”

In an initial forecast for the year, OECD said growth in the G7 economies could slow to an annual rate of 1.5% in the second half of the year. To support its reduced forecasts, it said “recent high- frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated”.

US growth rates of 2.5% and 1.2% in the third and fourth quarters have been estimated by the group, following 1.6% in the second quarter and 3.7% the first.

In its findings, the OECD said growth remained robust in large emerging markets.