The Organisation for Economic Co-Operation and Development has sharply downgraded its predictions for economic growth.
The OECD said the world economy will shrink at a far faster pace than originally expected this year as “we are in the midst of the deepest and most synchronised recession in our lifetime.” This year it expects the euro zone and the US economies to contract by around four percent and Japan’s by 6.6 percent. Next year Japan’s economy should shrink by 0.5 percent and the euro zone by 0.3 percent while the US will likely be stagnant. The OECD forecasts – particularly on international trade – are much more pessimistic than the latest from the World Bank. Its President Robert Zoellick, speaking ahead of the G20 Summit, urged bold action: “Today we must not shrink from unifying ideas and actions. At a time of lost confidence, we need deeds that restore public trust that governments are up to the challenge. There is a greater risk in doing too little than in doing too much.” Zoellick announced a 50 billion dollar programme to reverse a sharp drop in trade caused by the global crisis. He urged the G20 leaders to back that effort at their summit this week and said the problem is being made worse by a shortfall in trade credit, through which exporters and importers settle accounts. The World Bank expects global trade volumes to fall by six percent this year, the largest decline in eighty years, but still less than half the 13.2 percent decline anticipated by the OECD.