Now the OECD is raising its economic growth forecasts, despite being in Paris and in the midst of European woes. It’s no small hike either, the OECD’s new 2010 GDP growth forecast is 2.7%, up nearly 50% from their previous estimate of 1.9%.. 2011’s growth forecast has been increased to 2.8% from 2.5%.
In the US, activity is projected to rise by 3.2% this year and by a further 3.2% in 2011. Euro area growth is forecast at 1.2% this year and 1.8% next while, in Japan, GDP is expected to expand by 3.0% in 2010 and by 2.0% in 2011.
They’ve become more bullish on economic growth around the world while fully cognisant of the current financial challenges for many developed world nations.
With a huge debt burden weighing on many OECD countries and the strengthening recovery, the emergency fiscal measures provided by governments to tackle the crisis must be removed by 2011 at the latest, the Outlook says. It adds that the pace of such action must be appropriate to particular conditions and the state of public finances in each country.
They warn though that if developed world budget deficits are confronted, the OECD could be in for an extended period of sub-par GDP growth, from 2011 out to as far as 2025. So it’s up to countries to start rolling back their massive crisis-driven government spending programs without completely derailing economic growth. One big reason why countries need to keep growth chugging is that unemployment remains high across the OECD.
We realise forecasts are in the end subject to error, but what’s key here is that waves of latest economic data, inclusive of European problems, have resulted in a net-increase in projected GDP growth. There’s a lot of bad news to focus on right now, but there’s a ton of good news as well.