Unemployment rates in many Organisation for Economic Co-operation and Development (OECD) countries will hit double figures by the end of 2010, according to the OECD’s interim economic outlook.
This will be the first time unemployment has reached such a level since the 1990s, and will considerably affect GDP growth. As unemployment climbs, the OECD expects global GDP to fall by 4.3% in the OECD area, while international trade is forecast to fall by more than 13% in 2009. The world economy is expected to shrink by 2.7%.
In America, the OECD forecasts a 4% fall in GDP in 2009, while Japan’s output is projected to drop by 6.6%.
Weak export markets, falling investment and the continuing credit crunch are expected to result in a 4.1% drop in the eurozone’s GDP in 2009 and a drop of 0.3% in 2010.
The large emerging market economies are not immune from the downturn. The OECD forecasts that Brazil’s GDP will decline by 0.3% in 2009, while Russia’s GDP is projected to fall 5.6%. Meanwhile, India’s GDP growth is expected to slow to 4.3% and China’s to fall back to 6.3%.
According to the OECD report, the discretionary stimulus measures taken by global governments will on average add about 0.5% to GDP in 2009 and 2010.