US likely to record zero growth in Q2, says OECD

NEW DELHI: The Paris-based Organisation of Economic Cooperation and Development (OECD) has projected zero growth for the US economy in the second quarter of 2008, indicating that America is inching towards a recession.

"It may be premature to declare a recession, but with the pace of activity so far below potential, economic slack is widening rapidly," the OECD said pointing out that economic growth rate was likely to slip from 0.1% in Q1 to zero in the second quarter.

Giving growth projections for the G7 nations (US, Japan, Euro Area, Germany, France, Italy, UK and Canada), the OECD report said Japan and Europe were also likely to witness slowdown in growth. Japan, it added, is expected to grow at 0.3% in the first quarter and 0.2% in the second quarter, it added.

In addition to the sub-prime mortgage crisis, the OECD attributed the slowdown in the US economy to factors like soaring energy and food prices.

"The effects (of the crisis) on demand are likely to be significant but are hard to gauge", the report added.

The report said that the residential investment slump shaved off around one percentage point of the US gross domestic product (GDP) growth over the past two years and the trend would continue in the current year.