World economy

Grim growth outlook for industrialised countries, OECD

Article published on the 2008-06-04 Latest update 2008-06-05 08:27 TU

OECD 2008 report

Soaring food prices, a housing downturn and an uncertain financial market are the three main contributors to future low growth in the world's most developed countries, according to a report out Wednesday by Organisation for Economic Growth and Development (OECD).

The twice-yearly survey produced by the Paris-based think tank predicts that growth will slow to 1.8 per cent in 2008 and to 1.7 in 2009, down from 2.7 per cent in 2007. The OECD originally predicted a slightly rosier economic future for the most developed countries.

Lack of confidence in the US financial markets will remain for 2008 until a gradual upturn in 2009, OECD official Jurgen Elmeskov said Wednesday. It is likely to rise to 3 per cent after 2.2 per cent in 2007.

In eurozone countries, 2008 will be the year of the highest inflation since the euro entered the market in 1999, OECD economist David Turner said.

"Output growth is being slowed by tighter financial conditions, higher inflation and weaker housing market activity," according to the report.