OECD slashes global growth forecasts over euro zone risk
Tuesday, November 27, 2012 - 04:25
The economic organisation warns the debt crisis in the recession-hit euro zone poses the greatest threat to the world economy.
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That we CD has lowered its outlook for global growth it says a key Fatah and its assessment is a significant drop in investor and consumer confidence. Joining me from upon us is that we see these chief economist piazza Carlo putt -- That's a -- first off I will will get -- report a second. I just want to get your reaction to the the EU and I'm a deal stupid these last night what's your reaction. Well it is a major step forward to address the Greek problem. But of course it all is about implementation. Implementation of the measures in this is first face to bring the debt down. Including the buyback operations and implementation solved the second phase win. AEU countries commit themselves to do something more in the future if there is need to be at further address and further measures to address -- -- up and our courts are somewhat sorry am I opposing it talking about debt write downs. Well I'm talking about measures that they have committed to it takes to bring to that further down. Beyond that. 124% of GDP. And if that need be and of course that is conditional about implementation by the Greek authorities of their fiscal adjustment to structure reforms. So a good deal it has to be implemented well. OK until -- -- you've looked that you forecast for the eurozone and I GDP next year to see a contraction amenable contraction of only. Minus point 1%. Is -- still too optimistic still. Well we thought that we where I've been on a pessimistic side. Of course this is -- would respect to six months ago where we had that right there. Figures for the eurozone in the global economy. We are confident however that if there's no major shocks in the Euro area and if there and moves towards strengthening the policy framework. Including addressing debt issues. Then the eurozone is bound to slowly returned to aggregate growth by the end of next year beginning of training for team. Of course that's not just that economics and finance that it's gonna be a big issue for you know next -- we halved. A lot on the political front as well elections and Gemini I'm actually for example. How did you fight two of those risks into your forecasts. Well those risks are there because if there is no. Continuing T India adjustment grosses in countries facing elections. Especially the south and countries members of the eurozone then confidence might drop in in financial markets a debt could spark off. Varying in negative reaction so we take that into account. It influences by looking at at downside scenario which could describe a very -- very negative situation if confidence is lost. My market's. Okay you're you're much more optimistic on the United States am 2% growth next year and two point 8% -- and 2014. It's not sustainable given given the weakness elsewhere around the world particularly do you goes -- in Japan. Well first of all those. I assume that the fiscal cliff is resolved so that's a big if and we do definitely hope that's case. Secondly we would like to see that embedded into a medium term fiscal consolidation program. For the US fiscal situation which in is in bad need a web -- that happens. Then the US might pick up girls more even more than then no we forecast and that will be good for the global economy. Just to finish up you save that's. Investor and consumer confidence is being undermined largely because of the disjointed. In times of essentially to a policy in response to the crisis among the world. In your opinion was the biggest missed the global economy from a policy and a perspective. The biggest risk remains the Euro area but next of that is the US fiscal cliff. Both issues are to be dealt with strongly -- policy makers this is where the different. Comes in and policy makers could make a deal a big deal of difference. Around the world. Okay that's the plot on thank you very much my that was messed that that yet tunnel part of -- chief economist at that only CD and palace. I'm -- gave up this is Reuters.
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