Page last updated at 14:07 GMT, Thursday, 13 November 2008

OECD projects protracted slowdown

Assembly line
US car manufacturers are struggling with the economic downturn

The Organisation for Economic Co-operation and Development (OECD) has forecast a "protracted slowdown" for the world's leading economies.

The Paris-based body has forecast a fall in US economic activity of 0.9% in 2009, with the Euro area contracting by 0.5% and Japan by 0.1%.

Economic growth in the 30 countries of the OECD is forecast to fall by 0.3%, before growing by 1.5% in 2010.

The US is expected to contract by 2.8% in the final quarter of this year.

The average unemployment rate in the OECD area is projected to climb to 6.9% in 2009 and to 7.2% in 2010, up from an estimated 5.9% this year.

"The OECD area economy appears to have entered recession," the think tank said.

It named the financial crisis and the downturn in the housing market as the primary drivers of the economic slowdown.

The economies of both the US and the euro area will begin to grow again in the third quarter of 2009, according to the estimates.

Inflationary pressures

Inflationary pressures have, however, subsided. "Inflation peaked in the summer in many OECD countries and is now declining," the think tank said.

The OECD is forecasting inflation to fall to 1% in the third quarter of 2009, before maintaining a level of 1.3% throughout 2010.

The full economic outlook containing detailed forecasts and analysis for all OECD countries and other major economies will be released on 25 November.

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