On June 26, 2009, the Organisation for Economic Co-Operation and Development (“OECD”) released its latest Economic Outlook . The Economic Outlook, released bi-annually, analyzes major trends and examines the economic policies required for high and sustainable growth in member countries. This Economic Outlook is the first report in two years to show upward signs of growth compared to previous projections. It also revealed a more balanced distribution of risk around the projections. The projections were based on an assumption that the current conditions in the financial markets do not significantly change for the remainder of the year.
Acting Head of the OECD, Jorgen Elmeskov, stated that the “worst scenario has been avoided” and the economies of OECD countries are “nearing bottom.” However, he also warned that, “[t]his is no time to relax—ensuring that the recovery stays on track and leads towards a long-term sustainable growth path will call for major policy efforts going forward.” Echoing Elmeskov’s remarks, Secretary General of the OECD, Angel Gurria, stated, “[t]hanks to firm action to stimulate our economies it appears that we have escaped the worst during this crisis.” He reiterated his belief that the coming months will be challenging and “[t]here needs to be a clear and credible plan and timeline for phasing out the emergency measures as the recovery takes hold. It is critical to consider these exit strategies now in order to prevent new risks in the years ahead.”
In part, the report revealed the following:
- US economic activity this year is expected to fall 2.8%, against the 4.0% decline projected in March. Growth in 2010 is now forecast at 0.9% compared with 0% previously.
- The stimulus measures taken in China has helped in recovery measures. Chinese GDP growth is forecast to be 7.7% in 2009 and 9.3% in 2010, an upward revision from the OECD’s March forecasts of 6.3% this year and 8.5% next year.
- Japan’s economic condition is improving, but recovery will be slow.
- Japan’s GDP is forecast to fall 6.8% in 2009 and to rise 0.7% in 2010, compared with March projections of falls of 6.6% and 0.5% respectively.
- In Brazil, economic activity is forecast to fall by 0.8% in 2009 and rebound to 4.0% growth in 2010.
- Recovery for European Union member states may be slow. Signs of impending recovery in the Euro area are not yet as clearly visible, reflecting country-specific combinations of bursting housing bubbles, export set-backs and damage to financial sectors.