OECD warns euro slump is going global

 
Tim Wallace
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EUROPE’S economic weakness has hurt trade, affecting the world economy, analysts at Fitch warned, as figures from the Organisation for Economic Cooperation and Development (OECD) yesterday strongly suggested worse it yet to come in the Eurozone, the BRICS nations and the US.

Fitch raised concern about the impact of the Eurozone crisis in its global economic outlook.

“Intensified market pressure and fast changing political events, reinforces the view that the Eurozone faces persistent problems with its banking and sovereign debt crisis,” said the ratings agency.

It slashed its 2012 GDP growth forecast for the currency area from 0.8 per cent last quarter to 0.4 per cent now.

“Slowing global growth” as a result has impacted on India and China’s growth forecasts, Fitch reported, cutting 2012 forecasts from 7.5 per cent to seven per cent and 8.5 per cent to 8.2 per cent respectively.

The OECD’s leading indicators include business sentiment, consumer confidence and employment expectations, and are used to estimate economic growth relative to its trend rate in six months’ time.

Every area covered by the OECD recorded a “slowdown” prediction in October, with the Eurozone’s indicator registering a year-on-year fall of 5.1 per cent, a drop of 7.9 per cent in Brazil, and India falling 8.7 per cent.

Those figures represent a slide from a 4.2 per cent year-on-year fall in the Eurozone in September, minus 7.7 in Brazil and minus 7.7 in India, indicating the situation is deteriorating further.

When it comes to Britain, the indicators are similarly gloomy, with the indicator’s decline on a monthly basis slowing only slightly from minus 0.7 to minus 0.6, and annually declining to a 3.8 per cent drop.

“This is the ninth successive monthly decline, and highlights the growing danger of a renewed recession,” said Howard Archer, economist at IHS Global Insight.