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Wednesday, 24 June 2009

Spinning the forecast

The Guardian is spinning a positive economic outlook by reporting that the financial situation “has improved for the first time in two years”, although “soaring unemployment and ballooning budget deficits could knock a weak recovery off track”.

The Organisation for Economic Cooperation and Development said in its latest economic outlook that the slowdown in its 30 member countries was close to the bottom. Growth of 0.7 percent should return to the area next year after a 4.1 percent fall this year. The OECD had previously forecast for a contraction of 0.1 percent in 2010 following a 4.3 percent fall this year. "This is the first time since 2007 that we have revised up the projection," OECD chief economist Jorgen Elmeskov told Reuters.

By my calculations, a 4.1 percent contraction followed by 0.7 per cent growth is a net 3.4 per cent contraction, so in what sense is that a positive outlook?

“Some day, son, mark my words, things may be as good as they are today”.

But when we read little further we see that the Guardian didn't mention that the OECD has revised down its forecast for the UK economy in 2009, warning the UK is in "a sharp recession" with output set to contract by 4.3% in 2009, worse than its previous forecast of a 3.7% fall.

The OECD predicts zero growth in the UK economy in 2010 and says the UK budget deficit will hit 14% of GDP next year.

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