OECD urges action on global recession

Agence France-Presse

"The world economy is in the midst of its deepest and most synchronized recession in our lifetimes, caused by a global financial crisis and deepened by a collapse in world trade," OECD chief economist Klaus Schmidt-Hebbel wrote in a report.

The economies of the 30 industrialized members of the OECD are projected to contract 4.3 percent this year before strengthening somewhat to show negative growth of 0.1 percent in 2010.

Growth in 2009 was forecast to contract 4.0 percent in the United States, 4.1 percent in the eurozone and 6.6 percent in Japan. The OECD sees economic momentum worldwide shrinking 2.75 percent this year before recovering by 1.25 percent in 2010.

The OECD report warned that the number of jobless workers in the Group of Seven - Britain, Canada, France, Germany, Italy, Japan and the U.S. - was likely to double from its mid-2007 level to reach 36 million in late 2010.

In many countries the employment rate as a percentage of the work force will rise to double digits.

But Schmidt-Hebbel argued: "While some have dubbed this severe global downturn a 'great recession,' it will remain far from turning into a repeat of the 1930s Great Depression, thanks to the quality and intensity of government policies that are currently being undertaken."

While social safety nets need to be strengthened, the report warned against "repeating the mistakes of the 1970s and 1980s when many countries attempted to reduce unemployment by encouraging early retirement, which would only reduce the labor force without boosting overall employment."The report said that in light of current official policies that provide financial institutions with deposit and debt guarantees as well as insurance schemes, the "economic haemorrhaging" can be stabilized, allowing for a "muted" recovery beginning in the first half of 2010.