The Organization for Economic Cooperation and Development (OECD) on Tuesday revised significantly downwards its economic growth projections for next year.
The OECD says growth among its 30 member economies will total only one percent next year, instead of the nearly three percent forecast only six months ago. In its semi-annual forecast, the OECD says the September 11 terrorist attacks in the United States inflicted a severe shock to the world economy. The short-term global outlook, says the OECD, is really ugly.
For the United States, the revised OECD forecast is identical to that issued last week by the International Monetary Fund. The U.S. economy is said to have recently entered recession, with growth this year revised down to 1.1 percent, and only 0.7 percent in 2002. Val Koromzay heads the OECD economic studies division. He says the U.S. downturn is likely to be relatively short and shallow. "This recession is, by historical standards, a short and mild recession," he said. "So, there may be downside risks in our forecast."
The world's second largest economy, Japan, is said to be in its worst slump in 20 years. Output in Japan is predicted to have contracted by 0.9 percent this year, and will fall to negative 1.3 percent growth in 2002. Germany, the third largest economy, is barely growing now, and little improvement is anticipated for next year.
The 30 OECD members include all the west European economies, three in North America, Japan, South Korea, Australia and New Zealand in the Pacific basin, and the Czech Republic, Poland, and Hungary in eastern Europe.
Both public and private forecasters agree that an already slowing world economy was thrown badly off track by the loss of business and consumer confidence that followed the September 11 terrorist attacks. A recovery is expected to be underway by early in the new year. Economists differ as to whether the recovery will be slow or fast.