(MENAFN- ecPulse) The global economy is finally heading back towards a growth path but making an "uneven progress" towards recovery due to Europe`s weakening economy, OECD said last week while trimming the growth forecasts of crisis-stricken Eurozone.
In its semi-annual Economic Outlook report, the Organization for Economic Co-operation and Development (OECD) cut its growth forecast for the Eurozone economy to -0.6 percent this year, after -0.5 percent in 2012, compared with its report six months ago, when it had expected -0.1 percent for the euro area, and 0.1 percent growth for 2013 a year ago.
OECD also said the U.K. was on the right path to a more balanced budget, despite warning that cuts and low consumer and business confidence would put a brake on growth. As for the U.S., the OECD said the world`s largest economy is forecasted to expand faster than its counterparts.
Unemployment across the euro area has hit another record high, the latest in a series of ignominious landmarks for the ailing single currency zone, Eurostat, the EU`s statistics office reported last week. Unemployment rose to 12.2% in April from the previous record of 12.1% the month before.
The usual back-breakers, Spain and Greece, are facing the highest levels of unemployment where latest data showed unemployment levels of roughly 27% in both countries, with youth unemployment well above 50%.
Inflation in the Eurozone rose to 1.4% in the year to May from 1.2% the previous month. With the Eurozone also in its longest ever recession since its creation in 1999, inflation was far below the European Central bank’s 2 percent target in May.
The latest numbers were released just two days after top officials from the European Commission instructed EU member states to focus more of their efforts on growth-centric policies to promote competitiveness and employment.
Last week, the European Commission decided to grant France, Spain, Slovenia and three other member states more time to bring their budget deficits under control to support the bloc`s struggling economy.
Besides France, Slovenia and Spain, the commission also gave the Netherlands, Poland and Portugal more time to bring their deficits below the EU ceiling of 3 percent of Gross Domestic Demand (GDP). The commission gave a two-year extension for France and for Spain, and one year for the Netherlands.
The recent lackluster data puts more pressure on the ECB to deliver even more conventional and non-conventional measures. In its report earlier this week, the OECD hinted that the ECB might want to expand quantitative easing as a measure to encourage stronger growth.
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