Euro area may be stuck in persistent stagnation: OECD

PanARMENIAN.Net - The euro area may be stuck in persistent stagnation, the Organization for Economic Cooperation and Development has said, according to BBC News.

Insufficient policy stimulus could be undermining potential growth, and risks deflation in the area, the market economy group said.

Meanwhile, Japan will grow less than previously expected over the next two years, it said. The U.S. and the UK are expected to grow more strongly in comparison, it added.

The OECD's report said: "The euro area as a whole, and in particular the vulnerable countries, seems to be most likely to be affected by persistent stagnation tendencies."

Its inflation forecasts of 0.6% for the euro area next year and 1.0% for 2016 are slightly more pessimistic than the EU's own forecasts, and far from the European Central Bank's target of just below 2%.

The GDP of the euro area is still below its pre-crisis peak, compared with the US and UK, which have surpassed theirs, the OECD said.

"The crisis-related hit to potential output has been significant" in the euro area, and the unemployment rate is high, it added.