MercoPress. South Atlantic News Agency

OECD GDP growth slips from 0.9% to 0.5% in last quarter

OECD chief Mr. Angel Gurria

Global economic growth is going to be lower than the OECD (Organization for Economic Co-operation and Development) and many other forecasting organizations were predicting just a few months ago, OECD chief Angel Gurria said on Wednesday.

The latest data on OECD area GDP growth shows a slowdown to 0.5% in the fourth quarter from 0.9% in the third quarter with all major economies, except Japan, loosing ground. Gurria said central banks were now striking more of a balance between growth and inflation concerns than a few months ago, when most of the warnings from monetary agencies were about inflation rather than risks on the growth front. "Monetary authorities now seem to have a more balanced preoccupation between growth and inflation considerations," he said. In December, the OECD forecast the U.S. economy would grow by 2% in 2008, with Japan expanding by 1.6% and the Euro zone posting growth of 1.9%. Asked what advice he would give to the European Central Bank, Gurria said: "I'd never dare try to second-guess Mr (ECB President Jean-Claude) Trichet ... he'll do what's best for Europe." Gurria was speaking at a news conference on an immigration report published by the Organisation for Economic Co-operation and Development, whose 30 member countries are mainly wealthy industrialized nations. The press conference coincided with the release of the latest data on OECD area GDP growth which slowed to 0.5% in the fourth quarter from 0.9% in the third quarter. The slowdown was general in all of the major economies except Japan, where growth accelerated to 0.9 from 0.3%. US growth slowed to a quarter-on-quarter rate of 0.2% from 1.2% in the previous period, while Euro zone growth eased to 0.5% from 0.8%. OECD area GDP grew 2.6% year-on-year in the fourth quarter compared with a year-on-year growth rate of 2.9% in the third quarter. The US accounted for 0.9 percentage points of the 2.6% OECD area year-on-year growth rate, with the Euro zone contributing 0.6 points, Japan 0.2 points and other countries 0.9 points. In the UK it slowed slightly from 0.7 to 0.6%. These numbers indicate that the credit crunch that began in August and reflects uncertainties about the size and distribution of losses made by financial institutions on investments in the U.S. subprime mortgage market is acting as a drag on growth across most of the developed world.