• Caught in the debt trap?

    Help us help you by taking our second annual Debt survey and you could win R3 000.

  • Rich man, poor man

    Culture change from below is the only way to overcome poverty, says Leopold Scholtz.

  • Tech bubble talk

    After the tech euphoria of 2013, the fast-moving sector has hit a speed bump.

Data provided by McGregor BFA
All data is delayed
Loading...
See More

OECD: Eurozone crisis to hamper recovery

Nov 27 2012 13:21 Reuters

Related Articles

Unemployment rate in rich countries up

SA medical costs among world’s highest

'Fiscal cliff' could derail US recovery

Financial crisis curbs global aid - OECD

OECD: Eurozone debt crisis far from over

OECD: Eurozone risks vicious debt circle

 
Paris - The OECD cut growth forecasts for most countries in the European Union's eastern wing on Tuesday and urged Hungary to do a deal with international lenders even as most analysts give such a deal less than even odds of happening.

The Organisation for Economic Cooperation and Development said the euro zone crisis and austerity drives by emerging Europe's governments would sap recovery in most of the region.

In a regular report, the group said the economies of Poland, Slovakia, and Estonia would grow both this year and next.

It said inflationary pressure implied monetary easing was on the cards for Poland, but interest rate cuts in Hungary could destabilise price stability and undermine policy credibility.
 
Hungary

The OECD said closing an aid deal with the European Union and IMF was "critical to growth" because it would lower Budapest's borrowing costs, improve investor confidence and boost domestic lending.

Under the assumption that a deal will materialise, the organisation forecast economic contractions of 1.6% this year and 0.1% in 2013.

In May, the OECD forecast shrinkage of 1.5% for 2012 and growth of 1.1% next year. Analysts give only a 30% chance that Prime Minister Viktor Orban will sign a deal.

The OECD said the fiscal deficit would narrow from 3% of gross domestic product (GDP) this year to 2.7% in 2013 and 2014.

It said recent interest rate cuts by the central bank risked upsetting price stability and undermining policy credibility, and it added that rate setters should ease monetary policy only once inflation fell back below the bank's 3% target.

"Failure to conclude a financial agreement with the multilateral organisations could undermine already weak confidence, endanger fiscal sustainability and destabilise the exchange rate," the OECD said.
 
Poland

The weak European economy and fiscal consolidation will hit Poland, according to the OECD, which cut its growth forecast for the region's biggest economy to 2.5% this year, from 2.9% in May. It saw growth of 1.6% in 2013.

It said headline inflation would fall to the lower end of the central bank's 1.5% to 3.5% target band. Along with the slowdown in growth, that implies that rate setters should ease policy to support the economy, the OECD said.

The fiscal deficit should fall to 3.5% of gross domestic product - in line with the government's target - before falling to 2.9% next year.

The organisation also said the government should push on reforms to sell state owned assets, improve the tax structure, reduce red tape for businesses, end special pension schemes and reform farmers' health and pension systems to boost growth.

Czech Republic

The OECD deepened its forecast for a Czech economic contraction to 0.9%, from an estimate of 0.5% in May. It sees a recovery emerging in 2013 with 0.8% growth, expanding to 2.4% in 2014.

The organisation said the public finance deficit should stagnate at 3.3% of gross domestic product this year and next, above the European Union's 3% ceiling.

It will fall to 2.7% of GDP in 2014, it said, because of structural improvements in the budget and stronger growth.

Estonia

Estonia should lead EU OECD countries with growth of 3.1% in 2012, the OECD said, raising its forecast from 2.2% in May. That should accelerate to 3.7% next year.

The country's public finances should fall into a deficit of 1 percent of GDP this year, but then creep closer to a balanced result over the next two years.

Slovakia

The OECD sees Slovakia's car-export-driven economy expanding by 2.6% this year, unchanged from a May forecast. It said a weak labour market and fiscal retrenchment would squeeze growth to just 2% in 2013, down from an earlier estimate of 3%. The following year, however, growth should pick up to 3.4%, the OECD said.

Slovenia

Austerity measures and deleveraging by foreign-owned banks and companies will hit Slovenia's economy next year, the OECD said, predicting a contraction of 2.1%. It saw the fiscal deficit hitting 4.3% of GDP in 2012 and falling to the EU's 3% ceiling only by 2014.

Israel

The OECD said growth should slow from 3.1% this year to 2.9% in 2014, while an acceleration in price growth that should begin in the second quarter of next year would require monetary tightening.

It added that the government's deficit targets of 3% and 2.75% for 2013 and 2014 would be hard to hit, and instead forecast shortfalls of 4.1% and 4%.
oecd  |  eurozone economy
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

Ramphele: ANC can be defeated

The African National Congress can be defeated, Agang SA leader Mamphela Ramphele has told supporters in Temba near Hammanskraal.

 
 

Latest elections multimedia

Watch what happened when we blindfolded Helen Zille and asked her to eat random things
13 days to elections - news you need to know
11 Julius Malema quotes you'll never forget
DA won't get 30% - Zille

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...