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November 19, 2009

OECD says Industrialized Economies to Recover in Next Year

by Lisa Bryant

A new report predicts the United States and other industrialized economies could bounce back faster than previously predicted next year, with Asia driving the recovery.  Our correspondent has more for VOA on the latest assessment by the Paris-based Organization for Economic Cooperation and Development.

The Organization for Economic Cooperation and Development finally had some good news to deliver to industrialized nations emerging from their worst economic crisis in half a century. 

The U.S. economy is expected to grow 2.5 percent in 2010 and 2.8 percent in 2011 - after contracting 2.5 percent this year.

The Japanese economy is also expected to bounce back to positive growth of 1.8 percent next year, after shrinking 5.3 percent in 2009.  The 16 European Union countries sharing the euro currency will grow more modestly, at 0.9 percent in 2010 and 1.7 percent the following year.

By contrast, China's economy is expected to grow a strong 9 percent next year, and 9.3 percent in 2011, powering the world rebound.  Overall, the OECD revised its assessment upward for world growth at 3.4 percent in 2010, compared to the 2.3 percent it predicted in June.

But the news is not all good.  The OECD's chief economist Jorgen Elmeskov says unemployment in the 30-member group will remain high.

"In countries like the United States, where there has been a massive labor shakeout over the past year or two, there we have unemployment responding rapidly to recovery, and unemployment coming down relatively soon," said Jorgen Elmeskov. "But in other countries where enterprises have been hoarding labor, there we would not expect unemployment to respond to the recovery any time soon and therefore unemployment goes on rising."

Even in the United States, unemployment will be at 9.9 percent next year, before dropping slightly in 2011.  The OECD predicts the jobless rate in the eurozone will be higher - up to 10.8 percent by 2011.

Many OECD members are also saddled with high government debt, partly due to massive economic-stimulus measures.  The OECD warned they must also be careful not to unsettle markets as they begin to wind down these policies.