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Recession near bottom: OECD
By Greg Keller |
June 25, 2009, Thursday
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Print Edition
Print Edition
THE deepest global recession in more than 60 years is close to bottoming out, but recovery will be weak unless governments do more to remove uncertainty over banks' balance sheets, the Organization for Economic Cooperation and Development said yesterday.
In its half-yearly economic outlook, the Paris-based organization said it expects its member countries' economies to shrink by 4.1 percent this year, with only government rescue measures heading off an even worse decline.
That is a slight improvement from the OECD's last forecast in March of a 4.3 percent decline this year and is the group's first upward revision to its forecasts in two years, Secretary General Angel Gurria said in Paris, France.
"A really disastrous outcome has become more of a remote risk," said OECD acting economics department head Jorgen Elmeskov.
But the recovery "is likely to be both weak and fragile for some time," Gurria said.
The OECD now expects the United States economy to shrink by 2.8 percent this year after 1.1 percent growth in 2008. Japanese output is likely to contract by 6.8 percent this year and the 16-nation euro zone will likely shrink by 4.8 percent.
The OECD forecast a return to growth in all three regions next year, with overall growth across its membership expected to average 0.7 percent in 2010, according to the report.
That also represents an improvement from the OECD's last forecast of a 0.1 percent contraction next year.
World economic growth, which the OECD defines as its members plus Brazil, Russia, India and China, will rebound to 2.3 percent next year from a decline of 2.2 percent in 2009, according to the latest OECD forecast.
The speed of an economic rebound will vary across the globe. China already seems to be recovering, but in the US the end of fiscal stimulus measures and the continued need to repair banks' balance sheets means recovery there "could be uncharacteristically weak and insufficient" to offset unemployment of around 10 percent, the OECD said.
Recovery may also be slow in the euro zone, the OECD said, as rising unemployment weighs on spending.
In its half-yearly economic outlook, the Paris-based organization said it expects its member countries' economies to shrink by 4.1 percent this year, with only government rescue measures heading off an even worse decline.
That is a slight improvement from the OECD's last forecast in March of a 4.3 percent decline this year and is the group's first upward revision to its forecasts in two years, Secretary General Angel Gurria said in Paris, France.
"A really disastrous outcome has become more of a remote risk," said OECD acting economics department head Jorgen Elmeskov.
But the recovery "is likely to be both weak and fragile for some time," Gurria said.
The OECD now expects the United States economy to shrink by 2.8 percent this year after 1.1 percent growth in 2008. Japanese output is likely to contract by 6.8 percent this year and the 16-nation euro zone will likely shrink by 4.8 percent.
The OECD forecast a return to growth in all three regions next year, with overall growth across its membership expected to average 0.7 percent in 2010, according to the report.
That also represents an improvement from the OECD's last forecast of a 0.1 percent contraction next year.
World economic growth, which the OECD defines as its members plus Brazil, Russia, India and China, will rebound to 2.3 percent next year from a decline of 2.2 percent in 2009, according to the latest OECD forecast.
The speed of an economic rebound will vary across the globe. China already seems to be recovering, but in the US the end of fiscal stimulus measures and the continued need to repair banks' balance sheets means recovery there "could be uncharacteristically weak and insufficient" to offset unemployment of around 10 percent, the OECD said.
Recovery may also be slow in the euro zone, the OECD said, as rising unemployment weighs on spending.
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