Developed Economies Back On Track, OECD Says
November 17, 1999
The economies of the 29 industrialized countries which make up the Organization for Economic Cooperation and Development are finally all headed in the same upward direction, the organization says in its latest semiannual world economic outlook. Moreover, economic growth rates are unexpectedly high.
- The OECD area will expand by an inflation-adjusted 3 percent this year and next -- which is 1.5 percentage points higher than had been forecast just six months ago.
- But that rate will slow to around 2.5 percent in 2001.
- The group said that in the U.S. higher inflation could trigger "an abrupt change in investor sentiment," lead to a fall in equity prices, and result in a "hard-landing scenario, with potentially major consequences for the rest of the world."
- Japan is expected to grow at only 1.5 percent a year during the next couple of years, but the report found even that economy showing some positive signs.
Unemployment in the European Union is expected to decline further -- with a with a drop of about 2.5 million among those without a job between 1998 and 2000. EU unemployment is estimated to be 9.4 percent for 1999, compared with 4.2 percent in the U.S. and 6.7 percent for the entire OECD.
Though inflation is picking up in some countries, it is expected to remain mostly benign -- below 2 percent in the OECD area.
The group also warned against complacency in the face of recovery in Asia. Given the weak nature of the improvement in Japan, rapid implementation of structural reforms is still necessary to sustain and develop market confidence.
Source: Christopher Rhoades, "Industrial Economies Look on Track for First Time in Years, OECD Says," Wall Street Journal, November 17, 1999.
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