OECD Joins Critics Of Economic Dithering

Today the Organization for Economic Cooperation and Development (OECD) joined the chorus of economic observers and major players calling for urgent action to put "weakening global [economic] activity back on track."

The OECD calls for action both by Europe and the United States. OECD's latest Economic Outlook report foresees serious risks to the global economy.

OECD Chief Economist Carlo Padoan observes that “Prospects only improve if decisive action is taken quickly.” 

The Outlook’s baseline scenario assumes that policy-makers take sufficient action to avoid disorderly sovereign defaults, a sharp credit contraction, systemic bank failures and excessive fiscal tightening. It sees GDP across the OECD countries slowing from 1.9% this year to 1.6% in 2012, before recovering to 2.3% in 2013. Unemployment in the OECD area is also projected to remain high for an extended period, with the jobless rate staying at around 8% through the next two years.

“We are concerned that policy-makers fail to see the urgency of taking decisive action to tackle the real and growing risks to the global economy,” Mr Padoan said during the launch of the report in Paris. “We see the US  growth recovering only slowly, the euro area entering into mild recession and Japan growing faster because of reconstruction, but this boost is temporary and will fade away.”