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OECD: Katrina Might not Dampen US Economy

The Paris-based Organization for Economic Cooperation and Development (OECD) predicts the oil price hike and damage caused by Hurricane Katrina in the United States will likely deliver major short-term jolts to the economies of industrialized countries. The effects might not put a damper on the U.S. economy.

At a news conference in Paris Tuesday, the OECD's chief economist, Jean-Philippe Cotis, said it is too early to say for certain what effect high oil prices and the Hurricane Katrina will have on the U.S. economy.

Mr. Cotis says the U.S.economy could slow down in the third or fourth quarter, but it is also quite possible that the economy might keep growing at a rate of three percent or more for the year.

The report aims to update several key economic figures forecast by the OECD earlier this year. The Paris-based organization represents 30 mainly rich and industrialized countries.

Despite the high oil prices and the devastation of the hurricane Katrina, the OECD has kept the forecast for U.S. economic growth unchanged at 3.6 percent for this year. But Mr. Cotis cautioned that, in the short-term, hurricane Katrina could lead to higher inflation and depress consumer spending.

The OECD lowered its 2005 economic outlook for Britain to 1.9 percent, down from 2.4 percent previously. It also lowered growth for Germany to one percent from the previous 1.2 percent.

But it increased slightly its economic forecast for the 12 countries of the so-called euro-zone, despite its prediction that those countries are more vulnerable to oil price increases than the United States.