The Next Two Years for the World Economy

By Derek Thompson



The OECD has released its economic outlook (pdf) for the United States, Japan and the entire OECD member states (map here). The report projects GDP growth, inflation, unemployment and other stats out through 2011. One broad takeaway is that, in a reversal of fortune, strong recoveries in "emerging" nations like China and India will help fuel demand for goods in next few quarters. It should be noted, however, that as Europe's debt crisis makes the dollar strong, it hurts the competitiveness of our goods abroad.

GDP growth in the U.S. is projected to slow in each quarter of 2010, and unemployment is expected to average 9.6 percent in the last few three months of the year. That's bad news. But it could be worse.

The Eurozone is in for a horrible two years. It's hard to create jobs with GDP below 2 percent, and that's exactly what the OECD projects: Sub-two percent growth for a year between mid-2010 and mid-2011, during which time unemployment will climb above 10 percent. Without monetary stimulus from the European Central Bank, fiscal austerity plans throughout Europe will only cut more public jobs, take more private cash and reduce demand throughout the continent. It will be a rough retrenching.

This article available online at:

http://www.theatlantic.com/business/archive/2010/05/the-next-two-years-for-the-world-economy/57286/