GENEVA — The global economy is gradually gaining momentum, with the U.S. and big emerging countries such as China posting a healthier recovery, the Organization for Economic Cooperation and Development said in its latest economic outlook released Tuesday.
However, on the eve of a European Union leaders summit in Brussels, Pier Carlo Padoan, OECD chief economist, said, “The crisis in the euro zone remains the single biggest downside risk facing the global outlook.”
The OECD forecast growth in the U.S., largely driven by private sector demand, “should continue to strengthen as confidence is picking up in both businesses and households,” and estimates it will increase 2.4 percent this year, up from the 1.7 percent gain posted in 2011, and grow a further 2.6 percent next year.
But the rate of growth across the OECD’s 34 member countries is forecast to slow to 1.6 percent in 2012, down from last year’s 1.8 percent, before recovering to 2.2 percent next year. The agency said it expects private consumption growth in the U.S. also to be boosted by stronger labor market conditions. The OECD forecast unemployment in the U.S. to average 8.1 this year, down from 8.9 percent in 2011, and to fall to 7.6 percent in 2013.
“Healthy corporate balance sheets, low interest rates…and reduced uncertainty should also help business investment pick up,” the OECD said.
Major emerging economies are forecast to deliver expansionary growth as the recovery gears up. Economists at the Paris-based agency predict growth in China this year will reach 8.2 percent, down from 9.2 percent in 2011, but to bounce back next year to 9.3 percent, aided in part by accelerating household incomes.
In the troubled euro zone, weighed down by sovereign debt, high unemployment, weak banking and excessive fiscal consolidation in some of the member countries such as Greece, Italy, Portugal and Spain, the agency estimates growth this year to contract 0.1 percent and to grow by 0.9 percent in 2013.