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OECD: Euro area may be in 'persistent stagnation trap' | OECD: Euro area may be in 'persistent stagnation trap' |
(35 minutes later) | |
The euro area may be stuck in persistent stagnation, the Organisation for Economic Co-operation and Development has said. | The euro area may be stuck in persistent stagnation, the Organisation for Economic Co-operation and Development has said. |
Insufficient policy stimulus could be undermining potential growth, and risks deflation in the area, the market economy group said. | Insufficient policy stimulus could be undermining potential growth, and risks deflation in the area, the market economy group said. |
Meanwhile, Japan will grow less than previously expected over the next two years, it said. | Meanwhile, Japan will grow less than previously expected over the next two years, it said. |
The US and the UK are expected to grow more strongly in comparison, it added. | The US and the UK are expected to grow more strongly in comparison, it added. |
The OECD's report said: "The euro area as a whole, and in particular the vulnerable countries, seems to be most likely to be affected by persistent stagnation tendencies." | |
Its inflation forecasts of 0.6% for the euro area next year and 1.0% for 2016 are slightly more pessimistic than the EU's own forecasts, and far from the European Central Bank's target of just below 2%. | |
The GDP of the euro area is still below its pre-crisis peak, compared with the US and UK, which have surpassed theirs, the OECD said. | |
"The crisis-related hit to potential output has been significant" in the euro area, and the unemployment rate is high, it added. |