MercoPress. South Atlantic News Agency

High unemployment and modest 2010 upturn, SAYS OECD

Economic activity is expected to fall by 0.9% in the United States in 2009, by 0.5% in the Euro area and by 0.1% in Japan as OECD countries enter a protracted slowdown, according to latest projections.

Presenting the Organization for Economic Cooperation and Development forecasts for these three major economies ahead of the G20 summit on the financial crisis on 15 November, Jorgen Elmeskov, Director of Policy Studies in the OECD's Economics Department, said a high degree of uncertainty surrounds the outlook. Much depends on the depth and duration of the financial crisis, the main driver of the current recession, pointing out that "the ongoing adjustment in housing markets still has a long way to go." GDP for the OECD countries as a whole is expected to fall 0.3% year-on-year in 2009 before recovering slightly to grow by 1.5% in 2010. The average unemployment rate in the OECD area, estimated at 5.9% this year, is forecast to climb to 6.9% next year and reach 7.2% in 2010. Inflation should continue to ease as economic slack puts downward pressure on prices and if, as assumed, commodity prices maintain their recent lower levels. "Against this backdrop, additional macroeconomic stimulus is needed," said Elmeskov. More specifically the US GDP will grow 1.4% in 2008; down 0.9% in 2009 and will recover to 1.6% in 2010. In the Eurozone GDP will increase 1.1% this year; down 0.5% next year and experience a modest 1.2% expansion in 2010. For Japan, OECD forecasts 1.1% GDP growth this year; down 0.1% in 2009 and 0.6% recovery in 2010. Regarding unemployment the Eurozone will be the hardest hit with 8.6% in 2009 and 9% in 2010; the US, 7.3% in 2009 and 7.5% in 2010, while Japan 4.4% in both years.