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November 25, 2003
OECD predicts EU growth will be half that of US
By Lydia Adetunji
European Union economic growth next year is likely to be less than half that of the US, the OECD is expected to report this week.
The Paris-based group of the world's 30 richest nations is due
to publish its twice-yearly economic outlook tomorrow but some details were leaked to the Italian newspaper La Repubblica at the weekend.
The OECD confirmed they were broadly in line with the forthcoming figures.
According to La Repubblica, the OECD has lowered its forecast for EU growth from 2.4 per cent to 1.9 per cent for 2004. However, it
raised its expectations for the US from 4 per cent to 4.2 per cent for the same period.
Recent data from the EU have been relatively upbeat - gross domestic product (GDP) grew by 0.4 per cent in the third
quarter compared with the previous quarter, according to Eurostat estimates from this month - and the region is widely thought to be over the worst of its economic problems. However questions remain about the
sustainability of its recovery.
La Repubblica reported that the OECD forecast 1.7 per cent growth for France in 2004, while Germany was expected to grow at 1.5 per cent and Italy at 1.6 per cent. Those were
all slight downward revisions, but the OECD expected growth in all those countries to rise above
2 per cent in 2005. The newspaper indicated that 2004 growth forecasts for Japan and the UK were revised up -
Japan's from 1.1 per cent to 1.8 per cent, and in Britain from 2.6 per cent to 2.7 per cent.
La Repubblica also published details of the OECD's projections for public finances in member countries. It said the
US budget deficit was likely to be 5.1 per cent of gross domestic product in 2004. That was still less than the projected figure for Japan, which was expected to see a budget deficit of 6.8 per cent next year.
In comparison, the eurozone was expected to post a 2.6 per cent budget deficit.
Two eurozone countries were likely to breach the 3 per cent limit contained in the stability and growth pact, the EU's
fiscal rules, next year. France and Germany are expected to post budget deficits of 3.7 per cent of GDP each.
* The US economy should grow next year at the fastest pace in two decades, forecasters predicted
yesterday, AP reports from Washington.
A National Association for Business Economics' panel of 28 forecasters from various industries predicted that GDP would grow by 4.5 per cent in 2004. This compares with
the OECD's 4.2 per cent forecast.
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