December
6, 2007 Housing
Crisis, Oil Prices
to Dampen Economic Growth: OECD
Paris
The Organization for Economic Cooperation and Development (OECD)
said Thursday that the ongoing housing crisis, turmoil in financial
markets and record-high oil prices will restrain economic growth in
the developed world in the near term.
In its half-yearly Economic Outlook, issued in Paris, the OECD said
that the gross domestic product (GDP) is expected to decline
moderately in the member countries in 2008 before showing signs of
recovery the following year.
"One cause of this moderation (in economic growth) is the cooling
housing markets," the OECD said. "Adding to downside risk, the
financial turmoil that began over the summer has not yet played
itself out, with the eventual fallout on the real economy still hard
to gauge."
Japan's economic expansion is expected to continue, if at a slower
pace, the OECD said.
"A further tightening of the labour market is projected to reverse
the decline in wages, helping to sustain output growth of some 1.5
to 2 percent in 2008-09 and pushing inflation into positive
territory."
Taking a look at other expanding economies of the world it said
developing giant India's economic growth is expected to slow down
from its peak of 9.4 percent in 2006, dropping to 8.8 percent his
year and 8.6 percent in 2008.
In addition, the rising cost of oil, food and other commodities has
led to "a pick-up in headline inflation rates in many countries."
After slowing in the second half of 2006, economic growth in China
has accelerated again, and is expected to reach 11.5 percent this
year, the OECD said.
The OECD sees US economic growth falling to 1.1 percent in the first
quarter of 2008 before beginning a recovery that will bring GDP
growth to 2.8 percent in the fourth quarter of 2009.
The biggest threat to the economic health of the United States is
the deepening housing crisis.
The scenario is slightly different in the 13-nation euro-zone, where
GDP is expected to rise by 1.7 percent in the last quarter of this
year and then remain at a quarterly growth of 2.0 percent through
the second half of 2008 and all of 2009.
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