Eurozone missing world boom
THE EUROZONE should begin a programme of quantitative easing (QE) despite the world economy being on track for further growth, the Organisation for Economic Cooperation and Development (OECD) said yesterday.
The single currency bloc is at risk of prolonged stagnation if steps are not taken to boost aggregate demand, the analysts said. Prices are falling in Italy, Spain and Greece, with the Eurozone as a whole slipping perilously close to deflation.
The European Central Bank will support banks this week in a bid to boost lending, but full QE is not currently on the table.
The OECD’s outlook is more positive for other major world economies. They expect unemployment to decline in the UK, US and Canada and are forecasting growth rates of 2.8, 3.1 and 2.7 per cent respectively for 2015. The UK and US are therefore right in looking to unwind unconventional monetary policies, the OECD claims.
Japan is forecast to grow by 1.1 per cent provided it continues its monetary stimulus. China is expected to continue to grow at rates above seven per cent, while India and Brazil will see growth rates pick up – India’s to 5.9 per cent in 2015, while Brazil is expected to rebound from recession to see 1.4 per cent growth in 2015.
The OECD also highlighted the need for structural reform, especially fiscal consolidation in Japan.