The terrorist attacks of September 11th are directly responsible for the downturn in the world economy, according to the Organisation for Economic Co-Operation and Development (OECD).
It also predicts the world economy will remain very weak in the first half of next year and growth in Ireland is expected to slow to under four per cent next year. However it says the Irish economy should recover in 2003.
The economy here grew by 11 per cent last year.
In its biannual report published this morning, the OECD says the slump in the US economy that was apparent in the 12 months before September 11th was showing signs of relenting and that moderate growth was expected in early 2002.
However, the report says the attacks of September 11th and their after-effects inflicted a severe shock to the world economy so that OECD-wide output is now estimated to be contracting slightly in the second half of this year - for the first time in 20 years.
But the report concludes, assuming household and business confidence returns soon, a significant rebound of activity should take place in the second half of next year.
On average, real GDP in the OECD area could grow by about one per cent in 2002 and three per cent in 2003.
Area-wide unemployment is expected to continue to increase well into 2002, before retreating slightly, and inflation is projected to stay low due to moderate oil prices.