The OECD has just published the Economic Outlook 2013. According to the report the global economy is moving forward, but divergence between countries and regions reflects the uneven progress made toward recovery from the economic crisis. Historically high unemployment remains the most serious challenge facing governments.
World real gross domestic product (GDP) is projected to increase by 3.1% this year and by 4% in 2014. Across OECD countries, GDP is projected to rise by 1.2% this year and by 2.3% in 2014, while growth in non-OECD countries will rise by 5.5% this year and 6.2% in 2014.
Downside risks to the outlook have narrowed, but are still large. Adverse interactions between weakly capitalized banks, government finances and the real economy remain a significant risk in the euro area. Fiscal concerns remain in the United States and Japan in the absence of credible medium-term consolidation plans. Future withdrawal of exceptional monetary policy measures could lead to instability in financial markets. There is a risk that potential growth rates may be lower than currently estimated following the global economic crisis.
According to the study, 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. In Europe, bolder measures to solve the financial and banking crisis once and for all are needed to ensure a faster, stronger and more sustainable recovery. Construction of a full-fledged banking union needs to be speeded up.
The OECD warns governments that urgent action must be taken to reduce unemployment, which has risen to dangerous levels in many countries. Jobs are being created in some parts of the OECD, but more must be done.
The whole report is available for the IESE Community here.