The Organization for Economic Cooperation and Development (OECD) yesterday increased its forecast for growth in the US economy this year but slashed predictions for Japan and the eurozone.
The OECD, the Paris-based grouping of 30 developed countries, said growth in the US economy would be 1.8 percent this year compared to last year, a sharp upwards revision from a prediction in June of 1.2 percent.
Growth in the Japanese economy would be 1.2 percent instead of 1.7 percent and the eurozone would expand by 1.3 percent instead of 1.7 percent, the organization said in an interim assessment of leading OECD countries.
The combined economy of Group of Seven nations, the world’s leading industrialized democracies, was forecast to grow by 1.4 percent, unchanged from the last OECD analysis in June.
The revision to this year’s US figure was mainly due to unexpectedly strong data for the second quarter of the year, the OECD said.
The OECD does not exclude the possibility of a US recession but “we do not have projections for negative growth in the next quarters,” Jean-Louis Schneider, deputy director of the OECD economics department, said.
In Europe, the downward revision is also due to second quarter figures, which, unlike the US, surprised on the downside, Schneider said. The eurozone economy contracted 0.2 percent in the second quarter compared with the first, according to official data.
“In the euro area and its three largest economies, as well as in the United Kingdom, activity is foreseen to remain broadly flat,” Jorgen Elmeskovm, acting head of the OECD economics department said.
However, Britain will fare worst, falling into recession over the second half of this year, with the economy contracting by between 0.3 and 1.2 percent in the third quarter, and by between 0.4 and 1.2 percent in the fourth.
A recession is defined technically as two consecutive quarters of negative growth.
Britain’s economy would post growth of only 1.2 percent this year, down from its June estimate of 1.8 percent, the OECD said.
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