According to the OECD's latest Interim Economic Assessment, a moderate recovery is underway in the major advanced economies, with growth proceeding at encouraging rates in North America, Japan and the UK. The euro area as a whole is out of recession, although output remains weak in a number of countries.
The OECD pointed out that, since they now account for a large share of the world economy, the slowdown in the emerging economies points to sluggish near-term growth globally, despite the pick-up in the advanced economies.
In the second half of the current year, economic growth in the major advanced economies is expected to continue at a similar pace to that in the second quarter. In the three largest OECD economies, the US, Japan and Germany, activity is expected to expand by about 2.5 percent annualized in the third and fourth quarters. GDP growth in China is forecast to pick up to about eight percent by the final quarter, after a slowdown in the first half of 2013. Even that would represent a slower rate than in recent years, however.
"The gradual pick-up in momentum in the advanced economies is encouraging but a sustainable recovery is not yet firmly established. Major risks remain. The euro area is still vulnerable to renewed financial markets, banking and sovereign debt tensions. High levels of debt in some emerging markets have increased their vulnerability to financial shocks. And a renewal of brinkmanship over fiscal policy in the US could weaken confidence and trigger new episodes of financial turmoil, " said OECD deputy chief economist Jorgen Elmeskov.