PARIS — The world economy will continue slowly expanding for the rest of the year, despite signs of relative weakness in China and other emerging markets and an uneven recovery in Europe, the Organization for Economic Cooperation and Development said Tuesday.
The United States, Britain, and Japan are growing “at encouraging rates,” while the eurozone emerged from six consecutive quarters of contraction in the April-June period, the organization said in a new forecast. Recent indicators from the major advanced economies, including increased business confidence and stronger industrial production, suggest the trend will “continue at the improved rate seen in the second quarter.”
The US economy will probably grow at a 2.5 percent annualized rate in the third quarter and 2.7 percent in the fourth, the report said. The country’s economy grew 2.5 percent in the second quarter.
Japan will grow 2.6 percent in the third quarter and 2.4 percent in the fourth quarter, in line with the 2.6 percent second-quarter figure, according to the organization, a research and policy consortium based in Paris that represents the world’s most advanced economies.
But its assessment of the jobs market was notably somber. Unemployment, currently at high levels across the developed world, could become entrenched, it said, as long-term joblessness becomes structural unemployment with the potential to “remain even as the recovery takes hold.”
Germany, France, and Italy, the three largest eurozone economies, are likely to expand by a combined 1.3 percent in the third quarter and 1.4 percent in the fourth quarter, the organization said. That would be a little slower than in the second quarter, when growth in those economies was 1.6 percent. Germany’s economy will continue to be the main driver of European growth, the report said, as France grows slowly and Italy continues to contract slightly.
The picture in emerging economies is less promising, the organization said. China, it said, “appears to have passed the trough” — the nadir of its economic cycle — but it and other emerging economies face significant uncertainty, including possible financial market disruptions. That would partly be in reaction to the US Federal Reserve’s plans to begin scaling back its economic stimulus program.
That is a turnabout from recent years, when moribund growth in Japan and Europe was more than balanced by strong growth in emerging markets, the report said, and “makes for a continuation of sluggish global growth, notwithstanding the pickup in advanced economies.”
Under the circumstances, it cautioned, “a sustainable recovery is not yet firmly established and important risks remain,” among them the possibility of “deadlock and brinkmanship over fiscal policy in the United States,” and the 17-nation eurozone’s continuing vulnerability to “renewed financial, banking and sovereign debt tensions.”
The problem of long-term joblessness is best addressed by better training policies and stronger demand, as well as changes to tax law to increase work incentives, the organization said, adding that both developed economies and emerging countries face growth that will remain slow over the longer term.