Industrial production, business confidence picking up in advanced economies: OECD

The G7 major advanced economies are seeing a ‘moderate recovery,’ with industrial production and business confidence picking up in the second quarter of this year, according to the OECD’s latest Interim Economic Assesment.

The euro area seems to be bouncing back, ending six consecutive quarters of economic contraction. But recovery is “vulnerable to renewed financial, banking and sovereign debt tensions…many euro area banks are insufficiently capitalised and weighed down by bad loans.”

Despite this encouraging news for the world’s more developed nations, global growth is expected to remain ‘sluggish’ as several major emerging economies seem headed in the opposite direction.

As the US Federal Reserve prepares for its ‘tapering,’ emerging economies are witnessing a surge of capital outflows, which puts added pressure on those already experiencing large current account deficits.

“Currency and stock markets in India and Indonesia are plunging, with collateral damage evident in Brazil, South Africa, and Turkey.”

The 20 most traded developing economy currencies have fallen “about 4.4 percent in the past three months,” according to Bloomberg.

Here is a 2-minute video summary of the OECD report, which you can read in full here.