OECD to slash 2002 outlook for economies

The Organisation for Economic Cooperation and Development is set to slash its 2002 growth outlook for major world economies - more than halving earlier projections for the United States, Japan and Germany.

Draft figures show the Paris-based OECD preparing to cut growth estimates in all major countries as they struggle to buoy their economies following the September 11th attacks on the US. The sharp reductions in growth forecasts come as companies across the world pare their workforces and rein in profit and revenue forecasts.

The figures are part of a draft report sent to the OECD's member governments for consultation ahead of the group's end-of-year outlook, due to be released on November 20th.

According to the figures, the OECD is forecasting an overall 2002 growth forecast for its 30 member states of 1.2 per cent, down from an earlier mid-year projection of 2.8 per cent.

It sees the US growing next year at just 1.3 per cent, as opposed to its earlier forecast of 3.1 per cent. The 15-nation European Union is reported as growing at 1.5 per cent, as opposed to 2.7 per cent earlier.

Japan's economy is predicted to contract 0.8 per cent compared with an earlier projection of 1.1 per cent growth.

Europe's major economies also come under the OECD's forecasting axe. Britain is forecast to grow at a rate of 1.6 per cent next year - compared with the earlier projection of 2.6 per cent. Germany's forecast is cut from the spring projection of 2.4 per cent to 1.0 per cent.

The report does, however, expect economies to recovering in 2003.