Presenting a bleak outlook for the developed economies, the Organisation for Economic Cooperation and Development (OECD) today predicted a prolonged economic downturn in the coming months, with the US projected to shrink as much as 0.9 per cent in 2009.
The "projections point to a protracted downturn, with GDP likely to decline by a third of a per cent in 2009, but the uncertainties are large. That goes not least for the depth and duration of the financial crisis, the prime driver of the downturn," OECD today said in a report.
The grouping of 30 industrialised nations has estimated that the world's largest economy's growth, the US, would fall by 0.9 per cent in 2009, while the euro area is projected to contract by 0.5 per cent and Japan is expected to shrink by 0.1 per cent.
The projections from OECD come just days before the leaders of G-20 nations are coming together for the summit on the financial crisis. The summit is scheduled to be held on November 15.
The report on Economic Projections for the US, Japan & Euro area asserted that additional "macroeconomic stimulus" would be needed to prop up the financial system.
"Against the backdrop of a deep economic downturn, additional macroeconomic stimulus is needed. In normal times, monetary, rather than fiscal policy would be the stabilisation instrument of choice, and further monetary easing has been built in," the OECD said.
The report said that the US economy, which shrank by 0.3 per cent in the third quarter, will shrink by 0.9 per cent in 2009. However, the nation's GDP is projected to grow by 1.6 per cent in 2010.