The OECD cut its forecasts for growth in the US this year to 1.7 per cent from 3.5 per cent and in Japan to 1 per cent from 2.3 per cent today, but it held the euro zone figure almost steady at 2.6 per cent.
"The world economy has been expanding at a much slower pace in early 2001 than expected just six months ago, leading to a marked downward adjustment of near-term growth," the OECD, comprising the 30 leading industrialised countries, said. It forecast recovery in the second half of this year.
The OECD said the economy in the US would grow by 3.1 per cent next year, in Japan by 1.1 per cent and in the euro zone by 2.7 per cent. It said the ECB would have to cut its interest rates sharply if activity slowed.
The OECD had said on April 10th the euro zone would show growth of 2.7 percent in 2001.
The organisation said its forecasts were relatively optimistic and that risks to the forecasts were clearly on the downside.
It said that if stock markets were to fall substantially further, aggregate demand would be hit harder.
AFP