OECD Cuts World Growth Outlook, Predicts 'Softspot' in 2011

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globeThe Organization for Economic Cooperation and Development (OECD) cut its prediction for economic growth in 2011, forecasting a "softspot" as governments withdraw stimulus packages.

The OECD said the world economy will grow by 4.2% in 2011, compared with a previous forecast of 4.5%, Bloomberg News reported. Growth will rise to 4.6% in 2012.

The Paris-based organization cited falling house prices in the U.S. and U.K., high levels of sovereign debt and growing trade imbalances as potential threats to growth.

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"There are significant risks on the downside," OECD Chief Economist Pier Carlo Padoan wrote in the report. "Global imbalances remain wide, and in some cases have started widening again, and there are rising concerns that they may threaten the recovery."

The U.S. economy will grow by 2.7% this year, compared with a previous forecast of 3.2%. The slowdown will continue in 2011, with GDP rising by 2.2%, before hitting 3.1% in 2012.

The 16-member eurozone economy will grow 1.7% this year and in 2011, before reaching 2% in 2012.
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