May 17, 2008

OECD cuts economic forecasts for Japan and US

It is reported that the Organization for Economic Cooperation and Development has revised downward its economic forecasts for Japan and the United States for the first and second quarters of the year.

Organization for Economic Cooperation and Development said that Japan's economic growth for the January to March 2008 quarter was downgraded from 0.4% projected in December to 0.3% for the first quarter and from 0.4% to 0.2% for the second quarter in gross domestic product. It also cut US economic growth for the first quarter from 0.3% to 0.1% and from 0.4% to flat for the second quarter.

On the Japanese economy, the Paris based OECD said in an interim update, "In Japan, quarterly national accounts are volatile and prone to large revisions, but overall the pace of underlying growth seems to be softening as well, notwithstanding the support from still buoyant neighboring Asia economies. How macroeconomic policies should react is contingent on the outlook for activity and inflation beyond the near-term projection horizon as well as on the balance of several risks," such as developments in oil and other commodity prices and financial turbulence, it said.

OECD said that the US economy, meanwhile, is now essentially moving sideways, if not contracting outright. It may be premature to declare a recession, but with the pace of activity so far below potential, economic slack is widening rapidly.