Posted on 06/24/2009 9:09:42 AM PDT by SeekAndFind
PARIS -- The Organization for Economic Cooperation and Development said Wednesday that developed economies will shrink less sharply this year than it previously expected, and will grow next year.
The projection was the first upward revision to the OECD's growth forecasts since June 2007, before the financial crisis began. The International Monetary Fund is likely to follow suit when it releases new forecasts July 7.
However, the OECD warned governments and central banks against prematurely withdrawing stimulus packages, which it deemed essential in averting a deeper, more prolonged recession.
The OECD, a leading think tank and policy forum for its 30 member states, stressed that the recovery will be "both weak and fragile for some time," and could be derailed if bond yields rise sharply in response to mounting government debt, or if consumer spending falls more rapidly than expected in response to rising unemployment.
Many risks remain, the OECD warned. Chief among them is the possibility that the financial system could be more vulnerable to a rise in business and household defaults than the organization assumes in its new forecasts.
The OECD now expects the combined gross domestic product of its members to fall by 4.1% this year, and expand by 0.7% in 2010. In March, it forecast a contraction of 4.3% this year and 0.1% in 2010.
A cautious recovery is now projected to start toward the end of this year. Stimulatory policy settings, restored financial markets and demand from non-OECD countries should gradually add momentum next year, the OECD said.
But the OECD wasn't uniformly more upbeat about its members' prospects. While it now estimates that the U.S. economy will contract much less sharply this year, it expects the euro-zone economy -- and Germany in particular -- to shrink more rapidly.
(Excerpt) Read more at online.wsj.com ...
....this message brought to you by the same “experts” who never saw it coming in the first place.
If Obama hears about this, more spending,
taxing and grabbing is in our future.
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