OECD report sees halt in recovery
New Delhi: The Organisation for Economic Cooperation & Development (OECD) has said that hopes had been dashed about recovery in the gross domestic product (GDP) growth in the US with real GDP growth in OECD area forecast to be around 2.9 per cent in 2005 and 3.1 per cent in 2006 from this year's 3.6 per cent.

In its bi-annual world economic outlook, which was released in Paris, the intergovernmental think tank of 30 rich industrial countries said since the 2001 slowdown, the world economy has moved in fits and starts and compared to cautiously upbeat assessments that could be made even two months ago, the turnaround for the worse by abrupt gyrations in oil prices has been "a source of disappointment".

Though a surge in oil prices has depressed real incomes as well as confidence in the OECD countries, there are nonetheless good reasons to believe that the global economy would regain momentum in a not-too-distant future as GDP growth in euro area is set to improve from 1.8 per cent in 2004, 1.9 per cent in 2005 to 2.5 per cent in 2006.

Bolstered by strong balance sheets and high profits, the recovery of business investment should continue in North America and start in earnest in Europe, while consumer spending would benefit from the retreat of oil prices to less onerous levels, in a context where job creation is progressively strengthening and monetary conditions remain very accommodative.

From a geographical perspective, the momentum of this recovery would benefit from continued Asian dynamism, in China, where activity accelerated in the third quarter, following a desirable slowdown during the first half of the year and Japan, which has staged a spectacular comeback based on a renewed export drive, broadening into a recovery of investment, employment and finally consumption.
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