OECD Warns on Growth

The OECD is very downbeat in its latest interim assessment, warning that growth has stalled and that advanced economies will not grow much in the second half of the year.

“Economic recovery appears to have come close to a halt in the major industrialised economies, with falling household and business confidence affecting both world trade and employment, according to new analysis from the OECD,” it says. “Growth remains strong in most emerging economies, albeit at a more moderate pace.”

For Britain, the OECD sees growth, conventionally measured, of just 0.1% in both Q3 and Q4, while Germany and the big three eurozone economies (Germany, France and Italy) will see GDP contracting in Q4.

These, it should be remembered, are momentum forecasts, with a wide margin of error. The OECD also sees one or two signs of optimism:

“On the upside, a number of OECD countries are taking serious fiscal and structural reform measures, which should boost confidence. President Obama’s announcement later today is expected to provide a boost to job recovery in the United States.

“Japanese growth is expected to be buoyed by the ongoing reconstruction efforts following the earthquake and tsunami. Inflation may have peaked in emerging markets, which will allow for some policy easing. Investment levels in many OECD countries remain well below historical averages, offering the possibility for renewed corporate spending in the coming months if uncertainty abates.”

Its detailed forecast update is here.

This post originally appeared at David Smith’s EconomicsUK and is reproduced here with permission.