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Friday, 19 October, 2001, 10:30 GMT 11:30 UK
Sharp global slowdown predicted
A worker locked out of a shuttered factory
As lay-offs mount, economic prospects are gloomy
Growth in the world's biggest economies is set to fall sharply this year and 2002, according to a draft of predictions from a club of leading industrialised states.

Leaked figures from the Organisation for Economic Co-operation and Development (OECD) suggest that the economies of member countries will grow by an average of 1% this year, media reports said.

The figure, the lowest in almost two decades, will be followed by growth of 1.2% next year, the reports added.

Earlier this year - before the 11 September attacks, but after a string of profits warnings from leading firms - the OECD was predicting growth of 2% this year and 2.8% in 2002.

Joining the club

The OECD's predictions are the latest in a string of gloomy outlooks from world economic organisations.

Earlier this week, the World Bank followed up warnings of economic implosion in the developing world with predictions that East Asian growth would slip to 4.6% in 2001, compared with 7.3% last year.

World growth, it said, would fall to 1.3%, from 4% in 2000.

The US, it warned, would expand by 1.1% this year and 1% in 2002.

US grinds to a halt

For Japan, the OECD predicted economic contraction as the country battles with a decline in the key export market.

The Japanese economy will contract by 0.8% this year, compared with a previous forecast of 1.1% growth, the organisation said.

For the US, whose own woes have been largely responsible for Japan's export decline, growth will come in at 1.3% next year, compared with an earlier estimate of 3.1%.

Europe will fare little better, with the 15-member European Union predicted to show economic growth of 1.5% in 2002, down from 2.7%.

EU variation

But behind the overall EU forecast, OECD researchers predicted wide variations in performance between individual European economies.

The UK should manage 1.6% growth in 2002, the OECD said, against a previous forecast of 2.6%.

Germany, however, will manage a 1% gain. In the spring, the OECD foresaw the country could achieve 2.4% expansion.

Italy is seen expanding by 1.2% against the earlier 2.5% estimate, while France is set for 1.6% instead of the 2.7% seen earlier.

Better in 2003

But things should improve by 2003, the OECD said.

US growth should accelerate to 3.7% growth, close to the 4.1% seen last year, with Europe expanding by 2.9% and Japan recording growth of 0.9%.

 WATCH/LISTEN
 ON THIS STORY
BNP Paribas's Ken Wattret
"Even before terrorist attacks, growth was very clearly slowing down"
See also:

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