OECD expects GDP to shrink 4.3 per cent; jobless at 10 per cent

The economy of Organisation for Economic Cooperation and Development (OECD) is expected to contract 4.3 per cent in 2009, the Paris-based body said in a release on Tuesday.

''The forecasts are revised right up to the last minute, and the final forecasts will be published tomorrow,'' said an OECD spokesman.

This will push up the jobless rate to over 10 per cent from a 2007 low of 5.6 per cent.

''The world's 30 richest countries are facing a combined jump in unemployment of 25 million people in the current economic crisis, by far the biggest and swiftest rise in the post-war period,'' it noted.

OECD secretary general, Angel Gurría, said the jobs crisis was spreading rapidly around the world, pushing millions of workers and their families into poverty. He urged countries to get a grip on the issue.

''Governments need to take quick and decisive action to avoid the financial crisis becoming a full-blown social crisis with scarring effects on vulnerable workers and low-income households,'' he cautioned.

"Restoring global growth is an economic and political priority, but also an ethical, moral, social and human imperative. And employment and social policies are an essential component of a successful strategy to bring the OECD and non-OECD countries back on a growth track," he added.

He said most of the fiscal packages to support the economy that G8 and other countries have introduced, or are planning to introduce, include extra funds for labour-market and social-policy measures.

''The bad news is that these additional funds are rather limited, accounting for about 8-10 per cent of total expenditures in the US and France and less in most of the other countries. This may turn into a missed opportunity,'' he said.

Britain suffered the biggest ever rise in the claimant count measure of joblessness last month which shot up by 138,000 from January. Experts expect further big rises in the months to come.

Aid to poor nations touch $120 billion
Despite the economic downturn, the 30-member block is giving record amounts of aid to poorer countries, with the total aid rising to $119.8 billion in 2008, an increase of 10.2 per cent in real terms on 2007.

Five European countries – Denmark, Luxembourg, the Netherlands, Norway and Sweden – exceeded the United Nations' target of 0.7 per cent of gross national income in 2008.

The five largest donors by volume are the US, Germany, Britain, France and Japan.

The US's net aid rose 16.8 per cent to $26 billion last year. The UK's net aid rose 24.1 per cent to $11.8bn, the third-largest amount.

The OECD warned countries about using the financial crisis to cut back on aid.

"The current global financial crisis is having a serious impact on low-income countries," it said. "Aid cuts at this point in time would place a dangerous additional burden on developing countries already faced."

The OECD tallies up the aid from the 22 members of its Development Assistance Committee (DAC), which includes 15 countries in the European Union, Japan, Australia and New Zealand.

South Korea's aid rose 31.5 per cent to $797 million in 2008. The country aims to become a member of the DAC next year.