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Growth slowdown in OECD countries
Source: Agencies |
September 9, 2011, Friday
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Print Edition
THE outlook for economic growth in developed countries has got much worse in the last three months, the OECD said yesterday and urged central banks to keep rates low and be ready to pursue other forms of easing.
The latest estimates marked a sharp slowdown from the Paris-based organization's last forecasts in May but used different methodology so were hard to compare precisely.
The Organization for Economic Cooperation and Development forecast growth across the G7 group of major industrialized economies would average 1.6 percent annually in the third quarter before slowing to just 0.2 percent in the final three months of the year.
"With respect to three months back the growth scenario looks much worse, one would say that growth is stagnating," said OECD chief economist Pier Carlo Padoan.
"We are witnessing a growth slowdown across OECD countries."
The slowdown would hit Germany particularly hard, according to the OECD's estimates, forecasting that Europe's biggest economy would see annual growth of 2.6 percent in the third quarter before contracting 1.4 percent in the fourth.
The United States economy would see annual growth of 1.1 percent in the third quarter slowing to 0.4 percent in the fourth quarter.
The OECD, which is due to provide more complete forecasts later this year, warned that its latest outlook had an abnormally high margin of error due to exceptional uncertainty.
With the full impact of recent debt troubles in Europe and the US still unknown, the OECD warned that risks were high that growth could prove even weaker although it ruled out a recession on the scale of the 2008-2009 financial crisis.
In light of the fast deteriorating outlook, the OECD said central banks should hold interest rates.
The latest estimates marked a sharp slowdown from the Paris-based organization's last forecasts in May but used different methodology so were hard to compare precisely.
The Organization for Economic Cooperation and Development forecast growth across the G7 group of major industrialized economies would average 1.6 percent annually in the third quarter before slowing to just 0.2 percent in the final three months of the year.
"With respect to three months back the growth scenario looks much worse, one would say that growth is stagnating," said OECD chief economist Pier Carlo Padoan.
"We are witnessing a growth slowdown across OECD countries."
The slowdown would hit Germany particularly hard, according to the OECD's estimates, forecasting that Europe's biggest economy would see annual growth of 2.6 percent in the third quarter before contracting 1.4 percent in the fourth.
The United States economy would see annual growth of 1.1 percent in the third quarter slowing to 0.4 percent in the fourth quarter.
The OECD, which is due to provide more complete forecasts later this year, warned that its latest outlook had an abnormally high margin of error due to exceptional uncertainty.
With the full impact of recent debt troubles in Europe and the US still unknown, the OECD warned that risks were high that growth could prove even weaker although it ruled out a recession on the scale of the 2008-2009 financial crisis.
In light of the fast deteriorating outlook, the OECD said central banks should hold interest rates.
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