The Organisation for Economic Co-operation and Development has confirmed that world recovery has begun but at the same time has questioned its strength and predicted a rise in unemployment.
GV INTERIOR Delegates at conference
CU Dr Sylvia Ostry, conference president, speaking (SOT) and delegates listening (5 shots)
SV Camera crew (MUTE)
CU Ostry speaking (SOT)
TRANSCRIPT (SEQUENCE TWO) OSTRY: "It is really hard to judge the extent to which monetary conditions have indeed eased. In particular it is important to recognise that long term interest rates in real terms remain high by historical standards. The second of the main forces that we select as important are oil prices which, as you know, we've been concerned with for most of the past decade. They have fallen somewhat, but a sharp collapse of oil prices which appeared possible earlier, now seems less likely. There are several ways in which this easing of oil prices makes life easier for OECD. Inflation pressures are eased, the real income of our countries and all oil importing countries rise to more favourable terms of trade, and current account positions are strengthened. The analysis presented in the section on the effect of changes in oil prices, however, concludes that in current circumstances the effects of lower oil prices on OECD output growth, as opposed to income, are less clearcut, and in the final analysis depend most on how OECD governments choose to respond to the breathing room that lower oil prices unquestionably provide."
TRANSCRIPT (SEQUENCE FOUR)
OSTRY:In the United States the playing out of the major administration, tax and expenditure priorities, even recognising how uncertain we know, how uncertain exactly how these priorities will evolve in the overall budget process, points unambiguously towards significant further expansion."
Script is copyright Reuters Limited. All rights reserved
Background: The Organisation for Economic Co-operation and Development has confirmed that world recovery has begun but at the same time has questioned its strength and predicted a rise in unemployment. Dr Sylvia Ostry, head of the OECD Economics and Statistics Department, said it was hard to judge the extent to which monetary conditions had eased worldwide. Presenting her report at the organisation's headquarters in Paris on July 12, Dr Ostry said her department had selected interest rates and oil prices as the main forces affecting recovery. She told reporters it was important to recognise that interest rates, in real terms, were still high by historical standards and that even though oil prices had dropped they were now unlikely to fall sharply, as had been predicted. According to Dr Ostry lower oil prices had eased inflation pressures on all OECD and oil importing countries, raising real income to more favourable terms for trade and strengthening account positions. But she said the effects on OECD output growth were less clearcut and depended largely on how countries chose to use the "breathing room" that lower prices provided. Dr Ostry said that in the United States there were definite signs of "significant further expansion", with output expected to grow by 2.5 per cent in the first half of this year, rising to six per cent in the second half. Next year it was predicted the recovery surge would settle to 4.5 per cent. The OECD, meeting in Paris, has forecast that Europe will be hardest hit by a continued rise in unemployment with the number of jobless reaching 20-million, almost 12 per cent of the workforce, by the end of next year.