Zero economic growth as trade falls

The economic slowdown saw the OECD area marking time in the third quarter of 2001, with gross domestic product (GDP) showing no change from the previous three months for the second quarter in a row. GDP was up 0.8% from a year earlier, but this was the slowest increase since comparable figures for

Growth in the euro area was just on the plus side at 0. 1% in the three months to the end of September from the previous quarter, but in the Group of Seven largest economies, activity shrank 0.2%, with only France, Italy and the UK in positive territory.

Merchandise trade in the OECD area fell for the second quarter in a row, both from the previous quarter and from a year earlier. Exports and imports each fell a seasonally adjusted 1.9% in value terms from the previous quarter, with exports down 6.3% from a year earlier and imports dropping 7.2%. G7 exports fell 5.4% in volume terms from a year earlier, due notably to a 13% fall in Japanese exports and an 11.8% drop in those from the US, although virtually all G7 countries saw a fall in exports with the exception of Germany, where they were up 4.3%. G7 imports also shrank 3.3% in volume terms from a year earlier, with Canada seeing the sharpest fall at 7.6% followed by the US with a drop of 6.8%. Only France and the UK increased their imports over the period.

- but recovery is on the cards

Despite the slowdown, the OECD is confident that a recovery will take place in 2002. The latest OECD Economic Outlook posted a forecast of 1% for the OECD area. Chief economist Ignazio Visco, speaking outside a convention in Rome in mid-January, emphasised that while there were downside risks, the US economy was recovering faster than expected from the terrorist attacks of September 2001. In Japan more fiscal consolidation would be needed, while in the euro zone, fiscal discipline should be maintained, though there was some room for interest rate reductions. Neither the Enron issue nor Argentina's problems were of sufficient magnitude to alter the OECD's world view, Mr Visco argued. The next OECD Economic Outlook will be published in April.

See: ww.oecd.org/macroeconomics