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OECD slashes growth outlook for largest developed economies

FXStreet (Łódź) - The Organization for Economic Cooperation and Development released its updated economic projections on Monday, signaling that current geopolitical tensions and pressures stemming from the looming changes to the Fed monetary policy could weigh on major economies' growth.

The organization suggested that global economic recovery could be hurt by weak demand in the Eurozone, which is now seen expanding by only 0.8% this year, compared to the previous prediction of 1.2% growth.

"The recovery in the euro area has remained disappointing, notably in the largest countries: Germany, France and Italy," the OECD said.

"Confidence is again weakening, and the anaemic state of demand is reflected in the decline in inflation, which is near zero in the zone as a whole and negative in several countries."

Therefore, the organization urged the ECB to implement QE, in order to prevent the region from slipping into deflation and experiencing a further growth slowdown.

The US and the UK on the other hand were described as "moving to the end of their unconventional monetary easing." Still, the OECD cut their growth forecasts to 2.1% from 2.6% and to 3.1% from 3.2%, respectively. Japan's outlook was downgraded to 0.9% from 1.2%, while China's remained unchanged at 7.4%.

On a positive note, the report adds that "global growth should be somewhat more vigorous in the second half of 2014 and into 2015 given continued policy support, favourable financial conditions and growing confidence, alongside rising employment.”

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