Positive growth in China, India won’t check global recession, says OECD
21 Mar 2009
Beijing: The Organisation for Economic Cooperation and Development, a leading European economic think tank, has warned the world will experience "very negative" growth this year. It has also forecast that China's gross domestic product would expand only by 6-7 per cent - at almost half the 13 per cent rate in 2007.
Angel Gurría, secretary-general of the OECD, said: "Even positive growth in big emerging economies like India and China is not going to be able to offset the negative growth [elsewhere]."
The Paris-based organization had forecast a growth rate of 8% for China last November, and now its latest forecast emerges even as the World Bank has slashed its growth forecast for the communist nation to 6.5% this week.
According to Gurría, if China were to keep unemployment at acceptably low levels then it's "cruising speed" would have to be about 7%.
The OECD will release a formal report on 31 March.
Meanwhile a provisional OECD economic forecast released yesterday says the eurozone economy would contract by 4.1% this year, a deeper slide than the 3.5% forecast by the International Monetary Fund.
On China the OECD report says the global crisis is impacting the country's already impoverished countryside with household incomes dropping as migrant workers return home and repatriated income is no longer available.
Gurria also backed a larger role for China in global finance bodies, which it will recommend at next month's G20 summit in London. "The fact that China has less votes than Belgium tells you [it's needed]," he told reporters.
The 30-member OECD, a bloc of wealthy western nations, is seeking to form closer ties with emerging economies, such as those of China, India, South Africa, Brazil and Indonesia, even as their economy falters and heads for deeper recession.
