The world economy is slowing down due to a combination of factors such as the euro zone's debt problems and a weak U.S. housing sector, but it is not headed for a double-dip slump, the head of the OECD said on Monday.
We do not believe there is a return to a recession, Angel Gurria, secretary-general of the Organization for Economic Co-operation and Development (OECD), told reporters when asked if recent signs of a slowdown pointed to a major weakening in the global economy.
He cited political turmoil in the Middle East, debt problems in euro zone economies, higher commodities prices, the devastating March earthquake in Japan and fractious U.S. budget negotiations as some of the factors behind the cooldown.
There is recovery. There are positive numbers, (although) it is going to be a little softer than we thought initially, he said at a news conference in Seoul on the sidelines of a business conference co-hosted by the OECD.
The remarks came as recent data around the world raised concerns that economic momentum was slowing in many advanced countries and in particular the United States, on which many export-reliant Asian economies rely heavily for growth.
Gurria also said current talks among euro zone leaders on helping Greece avoid a debt default required a technical approach to make sure legal aspects were well covered, as well as strong participation from the private sector.
It has already taken too long. The solutions are on the table. I think the stakes are very high, he said.
Euro zone finance ministers kept up intense pressure on Athens on Monday to approve tougher fiscal austerity measures before a final decision is made on a further 12 billion euros in emergency loans. Greece says it needs the money by mid-July or it could default on its debts, which could wreak havoc on global financial markets.
The OECD chief also said he expected commodity prices to go up in real terms over the next decade, given supply and demand.
But it is also desirable because better prices make farmers invest more, plant more and produce more, and we need to increase productivity in the agricultural sector, he said later at a meeting with a small group of reporters.
The trend is up for the next 10 years, which will reverse the trends we have seen so far, he said.
(Reporting by Yoo Choonsik and Kim Yeonhee; Editing by Jacqueline Wong and Kim Coghill)