Keep calm, carry on

27 November 2012 By Olaf Storbeck

Growth prospects are grimmer than the monetary union’s governments currently assume, the OECD points out. Crisis countries are on track to miss their consolidation targets by a wide margin. They must be allowed to let this happen. More austerity would only make things worse.

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The OECD slashed its global growth forecasts on Nov. 27, warning that the debt crisis in the recession-hit euro zone is the greatest threat to the world economy.
In light of the dire economic outlook, the Organisation for Economic Cooperation and Development urged central banks to prepare for more exceptional monetary easing if politicians fail to come up with credible answers to the debt crisis.
The Paris-based think-tank forecast in its twice-yearly Economic Outlook that the global economy would grow 2.9 percent this year before expanding 3.4 percent in 2013. The estimate marked a sharp downgrade since the OECD last estimated a rate in May of 3.4 percent for this year and 4.2 percent in 2013.

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