TUAC - TRADE UNION ADVISORY COMMITTEE TO THE OECD

22/01/2014

Forecasts point to stagnation, not recovery - the need for a new approach

As global economic elites meet in Davos, opinions on the state of the global economy remain divided. On the one hand, latest projections from the World Bank suggest that global growth will pick up from 2.4% in 2013 to 3.2% in 2014. The Bank says that high-income countries “appear to be finally emerging from the global financial crisis”.1 On the other hand, as this economic briefing (prepared by Carolin Vollmann, Economist at the ITUC) shows, forecasts by the International Financial Institutions have been revised downwards successively since 2010 when restrictive policies were introduced in many countries. The Managing Director of the IMF herself has recently said “… we see rising risks of deflation, which could prove disastrous for the recovery”.2 It is becoming clear that the global economy cannot recover on export-led growth that so many countries are espousing. There must be an expansion of demand particularly from working households.