By Max Clarke
The long overdue global economic recovery is nearing standstill as consumer confidence throughout the world’s major economies hampers trade and employment growth, the Organisation for Economic Cooperation and Development has said.
“Growth is turning out to be much slower than we thought three months ago, and the risk of hitting patches of negative growth going forward has gone up,” OECD Chief Economist Pier Carlo Padoan said during a presentation of the OECD’s latest Interim Economic Assessment.
Much of the slowdown originates from employment uncertainty in the world’s leading economy, as the United States created no net jobs growth over the past quarter.
In the United Kingdom, however, government bonds remain competitive due in part to the Coalition Government’s aggressive cuts agenda. Critics of the Tory-led coalition observe that shrinking the public sector at a time of a global economic slowdown is detrimental to the broader economy, as jobs uncertainty among public sector employees, coupled with inflation and muted wage growth is eroding consumer confidence, fuelling retail decline.
To combat the US’s employment stagnation, President Obama has today pledged a jobs stimulus package worth some $450 billion. Should Obama’s initiative pay off, investor confidence will likely be partially restored and the global economy may edge from its stagnation.
Japanese growth is expected to be buoyed by the ongoing reconstruction efforts following the earthquake and tsunami. Inflation may have peaked in emerging markets, which will allow for some policy easing. Investment levels in many OECD countries remain well below historical averages, offering the possibility for renewed corporate spending in the coming months if uncertainty abates.
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