Real gross domestic product (GDP) is projected to grow by about 3.9 percent this year, 3.8 percent in 2012 and 4.6 percent in 2013 on average in G20 countries if without comprehensive policy action to heal euro area debt crisis and secure fiscal policy in the United States, the Paris-based Organization for Economic Cooperation and Development said Monday.
In a brief outlook report about G20 members, OECD expected "marked slowdown" in the euro area with "negative growth" in some economies while the US growth is projected to be "weak" with "a gradual pick-up from 2012."
The short-term economic outlook is heavily weighed down by uncertainties in the major advanced countries so that G20 leaders need to take "bold decisions" and "decisive actions" shortly, OECD Secretary-General Angel Gurria urged when presenting the report ahead of the G20 Summit in Cannes on Thursday and Friday.
Refusing to detail which eurozone countries would see the "negative growth", Gurria warned "this projection would happen if no actions were taken."
According to the OECD projection, GDP growth to remain weak in the advanced G20 economies over the next two years while the pace of activity in the major emerging markets is likely to be lower than in the pre-crisis period.
Due to slow economic growth, "unemployment is set to remain high in many advanced countries" with an average rate at 8.1 percent for 2011, 8.2 percent for 2012 and 8.0 percent for 2013, the OECD data showed. "Employment is the elephant on the table, not under the table," Gurria underscored.
As to euro area debt crisis, Gurria praised EU leaders' deal on Oct. 26 "an important first step" to address the debt and banking crisis, but he also pointed out these measures must be implemented "promptly and forcefully."
Many acclamation as well as buoyant market followed the EU bailout package passed on Oct. 26 as it finally agreed to recapitalize European banks with over 100 billion euros (140.18 billion U.S. dollars) and increased the EU bailout fund to 1 trillion euros (1.40 trillion U.S. dollars), but economists also called for more specific details to follow up.
"However, more detailed information is needed on the specific measures, including the options for EFSF enhancement," the OECD note said.
"For the first time, we are talking about fiscal union, de facto fiscal union," Gurria added referring to solutions to eurozone debt crisis. Current situation is "moving toward the right direction" but "decision" "execution" and "action" are what's most in need.
Out of concern on G20 fiscal situation, the OECD note additionally revealed public debt against GDP ratios for the United States, eurozone and Japan. The U.S. public debt is to bulge from 97.6 per cent of GDP this year to 103.8 percent in 2012 and 108.7 percent in 2013. The eurozone's data will be 95.2 percent, 97.2 percent and 97.6 percent from 2011 to 2013 in order while that for Japan is to reach 212.3 percent, 219.8 percent and 227.6 percent in order.
Gloomy outlook in advanced countries also increased risks of "unchanged" global imbalances while Chinese current account surplus is falling but that of the high-saving and oil-exporting countries are collectively rising.