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Solid world economic growth forecast in OECD report

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. (