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OECD cuts growth forecast

  |   May 29, 2013 at 1:17 PM
PARIS, May 29 (UPI) -- The Organization of Economic Cooperation and Development said Wednesday it has cut its economic forecast for the eurozone for 2013 and 2014.

The organization that represents 34 developed countries said economic output in the 17-member eurozone would contract by 0.6 percent in 2013 and return to growth at a rate of 1.1 percent in 2014.

In the previous World Economic Outlook Report, which is issued every six months, the eurozone's gross domestic product was forecast to shrink 0.1 percent in 2013 and grow at a rate of 1.3 percent in 2014.

The report also says global economic output would be slower this year and next than previously predicted.

The global GDP is now expected to rise 3.1 percent in 2013 and 4 percent in 2014. This was previously predicted as 3.4 percent for 2013 and 4.2% for 2014.

The U.S. economic recovery is expected to accelerate in 2014 with growth at 1.9 percent for 2013 and growth of 2.8 percent in 2014.

"The global economy is strengthening gradually, but the upturn remains weak and uneven," said OECD Secretary-General Angel GurrĂ­a in a statement.

"Supportive monetary policies, improving financial market conditions and a gradual restoration of confidence are at the root of the recovery," he said.

He also said the "fiscal adjustment of the last few years is beginning to pay off. Several countries are close to stabilizing their government debt-to-GDP ratios and ensuring a gradual decline in indebtedness over the longer term."

While praising governments that have worked on reducing their debt, the OECD, like many, advocates for stimulus programs as well.

"According to the OECD Economic Outlook, government policy should focus on measures to enhance growth, make public finances more sustainable and growth-friendly and implement structural reforms to boost investment and create jobs," the report said.

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