The Organisation for Economic Co-operation and Development (OECD) has lowered its global growth forecast for 2011, citing a slower-than-anticipated recovery in major economies and persistent uncertainty in the global economic outlook.

In its latest Interim Economic Assessment, the OECD projects global GDP growth of 4.2% in 2011, down from its previous forecast of 4.6% in May. The organization highlighted concerns about the pace of recovery in the United States and Europe, as well as the potential impact of fiscal tightening measures in several countries.

Key Factors Influencing the Revision

• Slower Recovery in Major Economies: The OECD noted that the recovery in the United States and Europe has been weaker than initially expected, with high unemployment and weak consumer demand weighing on growth.
• Fiscal Tightening: Several countries are implementing fiscal austerity measures to reduce government debt, which could dampen economic activity in the short term.
• Uncertainty: The OECD pointed to ongoing uncertainty related to the sovereign debt crisis in Europe and the potential for further financial market volatility.

Policy Recommendations

Despite the downward revision, the OECD emphasized the importance of governments maintaining supportive policies to bolster economic growth. The organization recommended that countries:

• Maintain accommodative monetary policies to support demand.
• Implement structural reforms to boost productivity and competitiveness.
• Address fiscal challenges in a credible and sustainable manner.

The OECD’s revised forecast underscores the challenges facing the global economy as it continues to recover from the financial crisis. The organization’s policy recommendations highlight the need for coordinated action to support growth and address underlying vulnerabilities.