The Organisation for Economic Co-Operation and Development (OECD) has issued its forecast for the world economy over the next two years - predicting a gradual global recovery - but warns that the European Central Bank needs to take action to stimulate the Eurozone.
The Paris-based think-tank also projected global economic recovery to be 3.3 percent this year, 3.7 percent next year, and 3.9 percent in 2016.
It also says that recovery will be quicker in the US and the UK, and predicted that India, Indonesia and South Africa will recover at a steady pace.
The outlook is less optimistic for Japan. In light of its recent economic struggles, the OECD now thinks that its recovery will be slower. The president of the Japanese central bank said today that the country is still dedicated to stimulating the economy, and committed to its programme of monetary easing.
Russia's economy is creeping towards a recession, and the OECD believe that it will continue to slow. Russia is currently struggling with falling oil prices and international sanctions that have been placed on the country as a response to its involvement in the conflict in Ukraine. The report suggests that Russia needs to foster new trade relationships, and that the process of doing so will take time, and the economy will continue to stagnate.
The OECD note that China has experienced a slowdown, but say that they do not expect job creation to struggle. Growth is predicted to still run at 7 percent in the next two years.
The Europe Problem
The OECD say that, 'modest global economic forecasts, continuing high unemployment, and downshifts in potential output,' mean that leaders around the world, particularly in Europe, should, "fully employ monetary, fiscal and structural policy levers to support growth" with a greater sense of urgency than they currently are.
OECD Secretary-General Angel Gurria added that: "Diverging monetary policies could lead to greater financial volatility for emerging economies, many of which have accumulated high levels of debt."
The report believes that the economy of the monetary union will remain weak, growing by 0.8 percent this year, 1.1 percent in 2015 and 1.7 percent in 2016.
ECB President Mario Draghi has been indicating that he too believes that a major stimulus package will be necessary. Last week he indicated that a major announcement is coming, although it is known that a number of Eurozone countries are opposed to the measure. The issue of a stimulus package will be discussed when the ECB's Governing Council meet in Frankfurt on December 4th.
The ECB has previously indicated it is willing to grow its balance sheet by up to €3 trillion.
