Reply #41: OECD: Oil Prices (and weak dollar) Set Back Global Recovery [View All]

[UpInArms]

http://www.forbes.com/home/feeds/ap/2004/11/30/ap1681393.html

The OECD cut its 2005 economic growth forecast for the euro zone and other major economies on Tuesday, blaming a "surge in oil prices" and the slide in the dollar.

The Organization for Economic Cooperation and Development said it expected euro-zone gross domestic product to expand by 1.9 percent next year rather than the 2.4 percent it forecast in June.

The Paris-based global economic think tank also trimmed its growth predictions for other industrialized economies, lowering its U.S. forecast to 3.3 percent from 3.7 percent and Japan's to 2.1 percent from 2.8 percent.

Europe is still lagging well behind North America and Asia, the OECD's latest twice-yearly Economic Outlook shows, and may struggle to keep up when the global recovery gathers pace next year.

A further rise in oil prices or decline in the dollar could "bear disproportionately on Continental Europe, where growth is still over-reliant on exports" and companies are paying the price for the rest of the world's strong demand for oil, the group said.

With the dollar setting new lows against the euro - making European goods and services more expensive abroad - the OECD said a solid euro-zone upturn would have to come from stronger consumer demand at home rather than exports.

...more...