OECD: GDP To Fall and Unemployment To Soar

According to the OECD’s Economic Outlook Interim Report released today GDP is expected to fall by 4.3% in the OECD countries in 2009. Unemployment rate is projected to soar to double digits by the end of 2010.

Some of the key takeaways from this report are:

  • International is projected to fall by 13% this year
  • US GDP is expected to drop by 4% this year and remain flat in 2010
  • US unemployment rate will peak at 10.5% in 2010
  • Due to shrinking exports, Japan’s economic economy is expected to fall 6.6% in 2009
  • Euro area will perform worse than the US with the output falling 4.1% this year and 0.3% in 2010
  • Among the BRIC countries, Brazil will perform much better than the other three as the report says “Brazil’s GDP is expected to decline by 0.3 percent in 2009 while Russia’s is projected to fall 5.6 percent. Growth in India will ease back to 4.3 percent this year and in China to 6.3 percent.”
  • On the real estate front, Residential starts in Spain, Norway and UK are down by over 50% from October’08  t0 January’09
  • Due to the collapse of East European countries, the banks of Austria, Italy, Sweden and Belgium face further losses due to their exposure to these economies
  • While private consumption is expected to decrease this year and next year, public consumption (demand for goods and services by the government) is projected to increase
  • A staggering 12% of all mortgages in US were delinquent or in foreclosure at the end of 2008
  • On Timothy Geithner’s Public-Private Investment Program(PPIP), the OECD says:”To ensure that the Plan is more effective in helping to overcome the financial crisis, the Administration should clarify implementation details (such as how long banks would be given to raise private capital) and make it clear that it will not hesitate to restructure systemically important but fragile financial institutions, even if that entails taking control of them, putting them into receivership, removing bad assets, and recapitalizing the remaining “good bank” with public funds.” (emphasis added)
  • On US foreclosures, the report warns “a more comprehensive plan is needed to more effectively induce lenders to reduce outstanding debt for homeowners owing more than what their homes are worth.”

To download the full OECD’s Economic Outlook Interim Report 2009, go here.

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