OECD forecasts deteriorating outlook

Click to follow
The Independent Online

The outlook for economic growth in the United States, Britain and the eurozone has worsened, according to the Organisation for Economic Co-operation and Development.

The outlook for economic growth in the United States, Britain and the eurozone has worsened, according to the Organisation for Economic Co-operation and Development. The Paris-based think-tank said the US leading indicator, which summarises information contained in several short-term indicators linked to gross domestic product, dipped to 103.1 in February from 103.2 in January, signalling that growth could well slow in the months ahead. The country's six-month rate of change, a measure which indicates change in the pace of growth, dropped to 1.4 from 1.8, after increasing in the previous three months.

For the 30-nation OECD area as a whole, the leading index fell to 103.8 in February from 104.0 in January.

The think-tank said: "Slow expansion lies ahead in the OECD area according to the latest composite leading indicators." It said that with the exception of Canada, all of the Group of Seven major economies showed a weaker performance in February, as measured by the six-month rate of change. Canada bucked the worsening trend, with its leading indicator edging up to 100.3 in February from 100.2 in January.

Meanwhile, the leading indicator for Britain fell to 100.3 from 100.4, while that for the eurozone dipped to 105.7 from 105.8. Prospects worsened especially for Germany, which saw a sharp fall in its indicator to 107.8 from 108.2.

The OECD's comments came after the European Commission slashed its growth forecast for this year to 1.2 per cent from the 1.6 per cent it predicted in October. On Monday it warned soaring oil prices and rising unemployment would put the brakes on the eurozone economies. The UK was one of the few countries to escape a cut to its growth forecasts, which were held at 2.8 per cent for 2005.

Separately, the Bank of England announced it would launch a new sterling trade-weighted index on Monday, after updating it to take account of the recent growth in UK trade with Asian countries and the expansion of trade in services.

Comments