29 Nov 2011

Eurozone entering recession, OECD warns

9:09 pm on 29 November 2011

The Organisation for Economic Co-operation and Development has issued a forecast suggesting the eurozone is entering recession.

The OECD predicts the eurozone economy will shrink in the fourth quarter by 1% and by 0.4% in the first quarter of next year.

It says Europe's debt crisis is the main risk to the world economy and a large negative event in the eurozone could send other big economies into recession.

The BBC reports the organisation also revised its forecast for global economic growth downwards to 3.8% this year and 3.4% next year.

Global trade growth is also slowing. The OECD predicts trade will have risen by 6.7% by the end of this year, but will slow to 4.8% during 2012.

International trade growth has weakened significantly. Contrary to what was expected earlier this year, the global economy is not out of the woods, the organisation warned.

However, the OECD predicted a pick-up in Japan's economy following the devastating earthquake and tsunami on 11 March.

It said Japan would grow by 2% in 2012, after a contraction of 0.3% in 2011.

For Britain, the OECD's predictions are a contraction of 0.03% this quarter and a further 0.15% in the next quarter.