1 OECD cuts global forecast (BBC) The global economy will grow by less than expected this year as growth in developing economies slows, The Organisation for Economic Co-operation and Development predicts. It expects 3.4% world growth this year, down from its 3.6% November forecast. In 2015, however, it still expects growth of 3.9%. It cut forecasts for China and the US. “We are still not out of the woods yet,” said OECD Secretary General Angel Gurria.
“The underlying picture continues to be of strengthening growth momentum in the major advanced economies,” the OECD said in its latest economic outlook report. “However, still-high unemployment in many countries and the subdued pace of growth in many emerging market economies relative to past norms are likely to limit the momentum of the recovery,” the OECD added. The OECD now forecasts 7.4% growth in China for this year, down from its 8.2% November forecast.
Meanwhile, the US economy is forecast to grow 2.6% this year against last November’s 2.9% estimate, because of a combination of bad weather in December and October’s government shutdown. However, it increased its forecast for the euro area, predicting growth of 1.2% against its November forecast of just 1%. Despite the increase in its growth forecast, it warned that the European Central Bank needed to take action to protect itself against the risk of deflation.
It suggested cutting its main interest rate to zero and said it should also consider bond purchases similar to those by the Federal Reserve. In the UK, the OECD predicted growth of 3.2% for this year, up from its November forecast, and said it also expected unemployment to fall further.
2 India services activity shrinks again (Anant Vijay Kala in The Wall Street Journal) Services-sector activity in India shrunk for the 10th successive month in April, according to a new HSBC index. The seasonally adjusted Service Sector Business Activity Index rose to 48.5 from 47.5 in March. A figure below 50 indicates contraction and above expansion. Services contribute about 60% of gross domestic product.
“While the business activity index improved it remained below the water line,” HSBC chief economist for India Leif Eskesen said. “This points to still subdued service-sector activity.” Orders received by companies continued to fall because of uncertainty as a result of continuing national elections, HSBC said. Weaker orders led to job losses ending a four-month run of creation, it added.
The central bank has increased interest rates three times since September to tackle inflation. The manufacturing purchasing managers’ index was unchanged from March at 51.3 but the pace of expansion was tepid and unlikely to inspire confidence about a recovery, HSBC said.
3 Polio spread a world health emergency (Maria Cheng in San Francisco Chronicle) For the first time ever, the World Health Organization has declared the spread of polio an international public health emergency that could grow in the next few months and unravel the nearly three-decade effort to eradicate the crippling disease. The agency described current polio outbreaks across at least 10 countries in Asia, Africa and the Middle East as an “extraordinary event” that required a coordinated international response.
It identified Pakistan, Syria and Cameroon as having allowed the virus to spread beyond their borders, and recommended that those three governments require citizens to obtain a certificate proving they have been vaccinated for polio before traveling abroad. “Until it is eradicated, polio will continue to spread internationally, find and paralyze susceptible kids,” Dr. Bruce Aylward, who leads WHO’s polio efforts, said during a press briefing.
Critics, however, questioned whether the announcement would make much of a difference, given the limits faced by governments confronting not only polio but armed insurrection and widespread poverty. “What happens when you continue whipping a horse to go ever faster, no matter how rapidly he is already running?” said Dr. Donald A. Henderson, who led the WHO’s initiative to get rid of smallpox, the only human disease ever to have been eradicated.
The WHO has never before issued an international alert on polio, a disease that usually strikes children under 5 and is most often spread through infected water. There is no specific cure, but several vaccines exist. Experts are particularly concerned that polio is re-emerging in countries previously free of the disease, such as Syria, Somalia and Iraq, where civil war or unrest now complicates efforts to contain the virus.
Some critics say it may even be time to accept that polio may not be eradicated, since the deadline to wipe out the disease has already been missed several times. The ongoing effort costs about $1 billion a year. CDC Director Dr. Tom Frieden said the reemergence and spread of polio out of Pakistan, Cameroon and Syria pose “a serious threat to our ability to eradicate polio.”