Recovery continues but looks set to slow slightly

Recovery from the recession is continuing, but looks set to slow slightly in the first half of this year, according to the latest assessment of the global economy from the OECD.

The Interim Assessment says growth “gathered steam” in the last quarter of 2009, and stood at 3.7%* in G7 economies (Canada, France, Germany, Italy, Japan, the U.K. and the U.S.). It was strongest in the United States, at 5.6%, and Japan, 3.8%, and weakest in Italy, which contracted by 1.3%.

But the assessment suggests growth will slow slightly in G7 economies in the first half of this year, to 1.9% in the first quarter and 2.3% in the second. For the three euro economies in the G7 – France, Germany and Italy – growth will be lower, with a forecast of 0.9% in the first quarter and 1.9% in the second.

Overall, the assessment notes a number of positive developments: Trade is recovering; business confidence is rebounding; unemployment may have passed its peak in the U.S., and lending conditions for banks have improved.

But there are downsides: The assessment warns that governments still need to be cautious in how soon they roll back the special measures they took during the crisis, citing “the fragility of the recovery, a frail labour market and possible headwinds coming from financial markets”.

 * The growth numbers quoted here do not include standard error ranges; these are included on page 4 of the Interim Assessment pdf.

Useful links

 OECD Interim Assessment, handout and webcast 

OECD work on economics and growth 

OECD Insights: From Crisis to Recovery

Brian Keeley

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