UK to Weaken as Recession Ends Early for Everyone Else

Recovery from the global recession is likely to arrive earlier than had been expected a few months ago. However, the pace of activity is expected to remain weak well into 2010, according the OECD’s latest Interim Economic Assessment (PDF).

The OECD forecasts economic growth across the Group of Seven countries to fall by 3.7% this year, a less brutal contraction than the 4.1% drop projected in June 2009. The latest GDP forecasts for this year provide slightly improved outlooks for Japan and the Euro area and an unchanged overall projection for the US. The lower annual growth projection for the UK this year is due to downward revisions to GDP in the final quarter of last year and first quarter of 2009.

Substantial slack combined with the prospect for a weak recovery, implies that strong policy stimulus will continue to be needed in the near term. Regarding monetary policy, taking the first steps towards normalisation of policy interest rates from their current exceptionally low levels should in most cases and on current prospects wait until well into 2010 and in some cases even beyond.

Watch the webcast of the press conference.

Similar posts which may be of interest:

1. Service Sector Recovery Gathers Momentum as Index Hits Twenty-Six Month High
2. Job Market Improvement? Permanent Jobs Rose at the Fastest Pace for Two Years in October
3. UK Online Recruitment Expands in October, Private Sector Still Hurting
4. Business Investment Down 10.4 per cent in Second Quarter
5. Inflation Expectations Unchanged, Satisfaction with Bank of England Falls
6. Retail Sales Rise as Consumer Confidence Trickles Back