The Paris-based Organization for Economic Co-operation and Development (OECD) economic outlook report released Thursday forecasts a sustained recovery in Europe, a 'soft landing' in the US and a solid world growth trajectory fired by the Asian boom.
In 2007 and 2008, the economy of the 31 OECD countries would experience a growth in GDP of 2.7%, according to the OECD forecast. Germany would continue to experience strong growth, with GDP set to expand by 2.9% in 2007, and there would be 'soft landing' in the US after several boom years. Growth in the US economy was slowing down from 3.3% in 2006 to 2.1% in 2007. Predicted growth for 2008 was 2.5%. Thanks to recovery in Germany and Italy, the Euro zone would experience a growth rate of 2.7% in 2007. In 2008, the predicted growth of 2.3% was above potential growth of 2%.The Germany economy's expansion rate would be 2.2% in 2008, 0.6 percentage points above potential growth rate. The trend was for the German economy to be increasingly sustained by investments and by consumption - a welcome development.
Growth would remain solid in Japan for 2007, up to 2.4% compared to 2.2% in 2006. However, there would be a slight downturn in 2008 with a predicted growth rate of 2.1%. Unemployment in the US would remain at the 2006 rate of 4.6% in 2007 and would rise to 4.8% in 2008. The German unemployment rate for 2007 would be 6.9%, down from 8.1% in 2006. The predicted German unemployment rate was 6.3% for 2008. Japanese unemployment for 2007 fell to 3.8% from 4.1% in 2006. The predicted unemployment rate for Japan in 2008 would be 3.6%, according to the OECD report. The overall rate for the OECD countries in 2006 was 5.9%, and was projected to fall further, to 5.6% this year and to 5.5% in 2008. Growth in China and India would be buoyant, the report predicted. However, it also warned of risks posed by imbalances in current accounts and, possibly, in financial and housing markets. (monstersandcritics.com)