Economic Recovery Slowing Amid Increased Uncertainty

The world economic recovery may be slowing faster than previously anticipated, according the OECD’s latest Interim Economic Assessment. Growth in the Group of Seven countries is expected to be around  1.5% on an annualised basis in the second half of 2010 compared with the previous estimate of around 2.5% in the OECD’s May Economic Outlook.

 

The OECD says the loss of momentum in the recovery is temporary although uncertainty has increased.

 

“The uncertainty is caused by a combination of both positive and negative factors,” said OECD Chief Economist Pier Carlo Padoan. “But it is unlikely that we are heading into another downturn.”

 

While consumer spending is set to remain weak, a combination of robust corporate profits and low business investment suggest that capital spending is unlikely to weaken further. Because inventories are now close to desired levels, a renewed depletion of stocks is also unlikely. Overall financial conditions have stabilised, the report notes, and growth remains strong in the major emerging-market economies.

 

Based on the most recent data, the OECD short-term forecasting models show that U.S. GDP is expected to rise by 2.0% in the third quarter but then moderate to 1.2% in the fourth quarter  of 2010. In Japan, GDP growth is forecast at 0.7% in the fourth quarter after 0.6% in the third.

 

 

MORE ARTICLES ON OECD, GDP

 


              

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