OECD Scales Back Growth Projections for Europe, Japan
Washington, Feb. 20 2003 (VOA News) -- The
Paris-based Organization for Economic Cooperation and
Development is scaling back its growth projections for
Europe and Japan. The economic think tank is particularly
concerned about the weak German economy.
In a teleconference
from Paris, OECD economist Robert Price says 2003
growth projections for Germany may be cut by nearly
one percent from what was forecast only ten weeks
ago. Calling Germany a special problem in Europe,
Mr. Price says economic indicators there have been
declining for five consecutive months. Germany accounts
for over half of Europe's output and its economy hardly
grew at all last year. Mr. Price says German industry
is cutting its labor force and that inexplicably the
growing service sector is failing to add jobs.
"The
industrial sector in Germany of course is still quite
vibrant. It grows quite substantially, but mainly
by productivity growth and labor shedding. The problem
in Germany is that this labor shedding does not then
feed into service sector employment growth. So obviously
there is this disjunction there. Our view is that
in terms of cyclical responses, related to what I've
just said, the German economy does not function properly,"
he said.
Mr. Price
says the German economic problem is structural, too
much rigidity in the labor market that makes it hard
to hire and fire people and excessively generous social
programs.
The OECD
will update its economic forecast in April. Currently,
it expects U.S. output to expand by about two and
a half percent this year, unchanged from what the
OECD forecast 10 weeks ago. Hardly any growth is expected
in Japan.
-- Barry
Wood
- Voice of America in Washington
--
Reprinted with the permission of Voice of America
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