© Sean Incremona
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The global economy is recovering, but at a a gradual and uneven pace. Recent US underperformance captured in the OECD leading indicator is largely associated with the growth deceleration seen earlier in the year, which was driven largely by transitory factors. However, issues associated with the stronger USD and lower oil prices have been more persistent. That said, the underlying momentum in the US remains constructive for ongoing moderate growth. Global growth is more challenging given key risks in emerging markets which are contributing to softness from commodity exporters. Europe's improvement is still nascent following aggressive ECB easing measures.
Meanwhile in the Euro Area, growth momentum seems to be firming and the leading indicator is unchanged at 100.7 for the third consecutive month. Do you expect the number to change sooner or later, keeping in mind the Greek crisis?
As mentioned above, Europe is in the early stages of a recovery. Recent turmoil in Greece is likely to cause uncertainty to reverberate around the Euro area that will act as a headwind for growth, though this will not be debilitating for the area as a whole.
The latest OECD Employment Outlook says the jobs recovery is modestly gathering pace, yet the employment will probably remain below the pre-crisis levels, especially in Europe. Unemployment in the whole bloc is projected to decline over the next 18 months, reaching 6.5% by the end of 2016. What would be your outlook on this matter?
It seems reasonable to assume an additional 0.4ppts of improvement in unemployment over the next 18 months to reach around 6.5%. US-led improvement helped bring the OECD rate down from around 8.0% around two years ago, but as the US reaches toward full-employment over the next 6 to 12 months, we are more likely to see incremental progress as the baton is passed to the rest of the bloc to absorb job market slack amid a modest growth environment.