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Economies Worldwide at a 'Standstill,' Group Finds

November 21, 2001|Associated Press

PARIS — The world's major economies appear to have slid into recession for the first time in 20 years but are expected to rebound by next year, the Organization for Economic Cooperation and Development said Tuesday.

The Paris-based group said global output had slowed to "a virtual standstill" in 2001, but a strong recovery in the second half of 2002 is projected.

The organization's chief economist, Ignazio Visco, said output among the OECD's 30 member countries is expected to contract by 0.3% in the second half of this year, placing the so-called OECD region in recession for the first time in two decades.

Gross domestic product growth will be limited to 1% in 2001--well below the 2% growth rate forecast by the OECD in its May report--and remain "very weak" in the first half of next year. The pace is expected to pick up in 2002, paving the way for a rebound to 3% growth in 2003, the report said.

"The economic slowdown that started in the United States last year, and spilled over to other countries, has turned into a global economic downturn," the report said.

Events related to the terrorist attacks further compounded the situation, prompting a slowdown in business investment, consumer demand and overall economic activity, which "inflicted a severe shock to the world economy," the report said.

The OECD commended the "rapid and timely" U.S. interest rate cuts both before and after the attacks, saying the moves were among the factors that would contribute to a robust global recovery in 2002. The Federal Reserve has cut rates 10 times this year.

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