OECD dire predictions for world economy

The OECD has announced what we have all feared – the world economy is in recession, the worst in 50 years, and has called on governments to step up stimulus spending to spark a recovery in 2010.

“The world economy is in the midst of its deepest and most synchronised recession in our lifetimes, caused by a global financial crisis and deepened by a collapse in world trade,” OECD chief economist Klaus Schmidt-Hebbel wrote in a report.

The OECD has predicted economic momentum will shrink by 2.75 percent this year.

In a similar report, the World Bank had forecast further declines in global economic output this year, with the latest projections showing the world economy contracting 1.7 percent early this year.

At the G20 gathering, the OECD called on all governments to come together to pull the economy out of the recession.

“There is a role for international coordination to achieve the right amount of stimulus… a common understanding of the severity of the recession and the required policy response should be aimed for.”

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