Britain's economy remains fragile but 'improvements are beginning to be seen' says OECD chief economist
Britain's economy is getting stronger and should avoid a triple-dip recession, according to the Organisation for Economic Co-operation and Development.
The Paris-based thinktank sounded a positive note for the global economy as a whole, saying the outlook has improved since its last update in November.
The UK is expected to show annualised growth of 0.5% in the first quarter, and 1.4% in the second. Pier Carlo Padoan, deputy secretary general and chief economist of the OECD, said: "The situation [in the UK] is still fragile. I think the policy course, both in terms of monetary and fiscal policy, is going in the right direction and improvements are beginning to be seen."
Economic activity is picking up in many major economies, the OECD said. It expects the US to rebound in the first three months of this year, while Japan has been boosted by a new growth strategy and stimulus package.
But it said improvements in financial markets around the globe have not been fully reflected in real economic activity, in part because confidence remains low.
Padoan warned that the flood of cheap money into the system, via generous stimulus packages, has also led to some "excessive risk taking".
"We have now learned that imbalances build up in a way we tend to ignore," he said. "Let's watch prices of assets going up which are not warranted by fundamentals. Let's be very careful. At the same time, let's be careful of not putting a brake on the recovery that is slowly materialising. It's a delicate balancing act."
In its interim assessment of the global economic outlook, the OECD said a meaningful recovery in Europe would take longer than the rest of the G7. It blamed this on a deteriorating jobs market, which has depressed consumer confidence.
"Especially in Europe, the rise of long-term unemployment, with more of the unemployed moving off unemployment insurance on to less generous social benefits, is worsening poverty and inequality," it said.
The thinktank also highlighted the growing divergence between Germany, which it expects to pick up strongly in the first half of this year, and other economies, which are forecast to either contract or show minimal growth.
Germany is expected to grow by 2.3% on a yearly basis in the first quarter, and then 2.6% in the second. By contrast, France is forecast to shrink by 0.6% on a yearly basis in the first quarter, followed by 0.5% annualised growth in the second quarter.
Growth in emerging markets is still much faster than in the G7 and these countries will drive the global economy this year. The OECD said annualised growth in China is expected to continue to be well above 8% in the first half of 2013. Reported by guardian.co.uk 13 hours ago.
Britain's economy is getting stronger and should avoid a triple-dip recession, according to the Organisation for Economic Co-operation and Development.
The Paris-based thinktank sounded a positive note for the global economy as a whole, saying the outlook has improved since its last update in November.
The UK is expected to show annualised growth of 0.5% in the first quarter, and 1.4% in the second. Pier Carlo Padoan, deputy secretary general and chief economist of the OECD, said: "The situation [in the UK] is still fragile. I think the policy course, both in terms of monetary and fiscal policy, is going in the right direction and improvements are beginning to be seen."
Economic activity is picking up in many major economies, the OECD said. It expects the US to rebound in the first three months of this year, while Japan has been boosted by a new growth strategy and stimulus package.
But it said improvements in financial markets around the globe have not been fully reflected in real economic activity, in part because confidence remains low.
Padoan warned that the flood of cheap money into the system, via generous stimulus packages, has also led to some "excessive risk taking".
"We have now learned that imbalances build up in a way we tend to ignore," he said. "Let's watch prices of assets going up which are not warranted by fundamentals. Let's be very careful. At the same time, let's be careful of not putting a brake on the recovery that is slowly materialising. It's a delicate balancing act."
In its interim assessment of the global economic outlook, the OECD said a meaningful recovery in Europe would take longer than the rest of the G7. It blamed this on a deteriorating jobs market, which has depressed consumer confidence.
"Especially in Europe, the rise of long-term unemployment, with more of the unemployed moving off unemployment insurance on to less generous social benefits, is worsening poverty and inequality," it said.
The thinktank also highlighted the growing divergence between Germany, which it expects to pick up strongly in the first half of this year, and other economies, which are forecast to either contract or show minimal growth.
Germany is expected to grow by 2.3% on a yearly basis in the first quarter, and then 2.6% in the second. By contrast, France is forecast to shrink by 0.6% on a yearly basis in the first quarter, followed by 0.5% annualised growth in the second quarter.
Growth in emerging markets is still much faster than in the G7 and these countries will drive the global economy this year. The OECD said annualised growth in China is expected to continue to be well above 8% in the first half of 2013. Reported by guardian.co.uk 13 hours ago.