After years of lagging growth, developed economies are staging a comeback, at the same time the emerging countries are slowing down the global growth this year, the Organization for Economic Cooperation and Development said Tuesday.
In its interim assessment, the organization was more upbeat than it has been in recent years, as debt and financial crises in Europe and the U.S. hammered growth.
The organization called on central banks, particularly in USA, to continue with the loose monetary policies that have been credited with helping economies rebound.
It said the expectations that the U.S. would ease its monetary stimulus program have already caused an increase in long-term market interest rates and started weighing on emerging economies. But with unemployment in many parts of the world still high, businesses and consumers still need the low interest rates and easier access to loans that loose monetary policy provides. A sharp pullback could sink the recovery, the report said.
In addition, while the (OECD) noted that the economy of the countries that use the euro has come out of recession, it warned that the region is still fragile and could drag down global growth.
The report predicted that the three biggest euro economies — Germany, France and Italy — would grow by an average of 0.4% this year, and growth in the U.S. would be around 1.7%, down slightly from its estimate of 1.9% in May.