Or this is only the beginning?
<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 1, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>1930s-style depression avoided: OECD
Thanks to global leaders' high level of awareness of Hoover-era errors
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(PARIS) Global leaders have steered the world away from a 1930s-style Great Depression by a 'very, very, high level of awareness' of the policy errors of President Herbert Hoover's era, a top international economist said, releasing an OECD study of efforts to save the global economy.
Klaus Schmidt-Hebbel, chief economist for the Organisation for Economic Cooperation and Development, spoke to The Associated Press as he slashed forecasts for growth in the 30 rich countries that make up its membership, predicting the economies of the OECD countries would shrink by 4.3 per cent this year, and by 0.1 per cent next year.
The new forecasts released yesterday compare with a November forecast that the OECD economy would shrink by 0.4 per cent this year and grow by 1.5 per cent in 2010.
It would have been worse without government stimulus plans, which would add half a percentage point to the OECD economy this year and next, according to the Paris-based organisation. The new spending is a sharp contrast with Hoover-era policy, which saw protectionism and efforts to balance budgets and raise interest rates.
'We would be looking into a Great Depression-like scenario if we had done the same policy mistakes which were done in the 1930s,' Mr Schmidt-Hebbel said.
The club of rich nations predicts a 'policy-induced recovery' would start to pull the global economy out of recession in 2010.
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</TD></TR></TBODY></TABLE>Jobless lines could keep growing through 2011, the organisation said, noting that the number of unemployed in the G-7 rich countries will almost double in mid-2007 to reach some 36 million in late 2010.
As G-20 leaders of rich and developing countries prepare for a summit in London this week, European countries are emphasising a toughened regulatory system for global finance while the US administration has urged more spending - an idea that holds little interest for Europeans wary about debt.
Three years of stimulus measures until 2010 add up to 5.6 per cent of 2008 gross domestic product in the United States, compared with 3 per cent in Germany, 0.6 per cent in France, 1.4 per cent in Britain and 2 per cent in Japan, the OECD study shows.
Thanks to more generous social programmes, however, European governments require less extra stimulus to cushion the impact of recession and safety nets may need to be strengthened in countries such as the US, the OECD said.
Economies absorb the extra spending in different ways, and only for the US and Australia would the stimulus package boost growth by more than one per cent of GDP this year and next.
In Germany, where people are more likely to save, the OECD estimates the impact at 0.5 per cent of GDP this year and 0.7 per cent in 2010.
When it comes to spending, Germany and Canada could afford more stimulus, the OECD says. High debt levels means Italy and Japan cannot.
Mr Schmidt-Hebbel said that governments have mostly avoided the protectionist urges that raged in the 1930s, helping convert a recession into the worst economic quagmire in human memory and toppling President Hoover, who lost the 1932 election to Franklin Roosevelt.
Even though a World Bank study showed 17 of the G-20 countries have implemented trade-restricting measures since they pledged at a summit in November to avoid protectionism, he said that the measures were limited and there 'should be sufficient pressure on countries to reverse or remove' them. - AP
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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 1, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>1930s-style depression avoided: OECD
Thanks to global leaders' high level of awareness of Hoover-era errors
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20>
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(PARIS) Global leaders have steered the world away from a 1930s-style Great Depression by a 'very, very, high level of awareness' of the policy errors of President Herbert Hoover's era, a top international economist said, releasing an OECD study of efforts to save the global economy.
Klaus Schmidt-Hebbel, chief economist for the Organisation for Economic Cooperation and Development, spoke to The Associated Press as he slashed forecasts for growth in the 30 rich countries that make up its membership, predicting the economies of the OECD countries would shrink by 4.3 per cent this year, and by 0.1 per cent next year.
The new forecasts released yesterday compare with a November forecast that the OECD economy would shrink by 0.4 per cent this year and grow by 1.5 per cent in 2010.
It would have been worse without government stimulus plans, which would add half a percentage point to the OECD economy this year and next, according to the Paris-based organisation. The new spending is a sharp contrast with Hoover-era policy, which saw protectionism and efforts to balance budgets and raise interest rates.
'We would be looking into a Great Depression-like scenario if we had done the same policy mistakes which were done in the 1930s,' Mr Schmidt-Hebbel said.
The club of rich nations predicts a 'policy-induced recovery' would start to pull the global economy out of recession in 2010.
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As G-20 leaders of rich and developing countries prepare for a summit in London this week, European countries are emphasising a toughened regulatory system for global finance while the US administration has urged more spending - an idea that holds little interest for Europeans wary about debt.
Three years of stimulus measures until 2010 add up to 5.6 per cent of 2008 gross domestic product in the United States, compared with 3 per cent in Germany, 0.6 per cent in France, 1.4 per cent in Britain and 2 per cent in Japan, the OECD study shows.
Thanks to more generous social programmes, however, European governments require less extra stimulus to cushion the impact of recession and safety nets may need to be strengthened in countries such as the US, the OECD said.
Economies absorb the extra spending in different ways, and only for the US and Australia would the stimulus package boost growth by more than one per cent of GDP this year and next.
In Germany, where people are more likely to save, the OECD estimates the impact at 0.5 per cent of GDP this year and 0.7 per cent in 2010.
When it comes to spending, Germany and Canada could afford more stimulus, the OECD says. High debt levels means Italy and Japan cannot.
Mr Schmidt-Hebbel said that governments have mostly avoided the protectionist urges that raged in the 1930s, helping convert a recession into the worst economic quagmire in human memory and toppling President Hoover, who lost the 1932 election to Franklin Roosevelt.
Even though a World Bank study showed 17 of the G-20 countries have implemented trade-restricting measures since they pledged at a summit in November to avoid protectionism, he said that the measures were limited and there 'should be sufficient pressure on countries to reverse or remove' them. - AP
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