OECD warns on growth

ANOTHER stock market tumble on the scale of the world-wide slide in August and September could knock 0.75 percentage point or more off annual growth in industrialised countries, the Organisation for Economic Co-operation and Development said yesterday.

The OECD, which believes the risk of a renewed decline in equity prices is considerable, estimated that a 20 per cent fall across the Group of Seven biggest national economies could take one percentage point or more off US growth. It warned risks of this were possibly stronger now than when it flagged the issue a month ago in the preliminary version its Economic Outlook, which was published in the final version yesterday.

The impact in the other leading economies would be somewhat smaller, with the UK seen as withstanding the effects of a worldwide equity slump for the first 12 months, although if G7 equity markets fell by 20 per cent it could wipe almost 1 per cent off UK growth within two years.