Haunted perhaps by the ghost of Herbert Hoover, global leaders have steered the world away from a 1930s-style Great Depression by a “very, very, high level of awareness” of the policy errors of his era, a top international economist said as he released an OECD study of efforts to save the world economy.
Klaus Schmidt-Hebbel, chief economist for the Organization for Economic Cooperation and Development, spoke to The Associated Press as he slashed forecasts for growth in the 30 rich countries that make up its membership, predicting the economies of the OECD countries will shrink by 4.3 percent this year, and by 0.1 percent next year.
The new forecasts released Tuesday compare with a November forecast that the OECD economy would shrink by 0.4 percent this year and grow by 1.5 percent in 2010.
It would have been worse without government stimulus plans, which will add 0.5 percent to the OECD economy this year and next, according to the Paris based organization. The new spending is a sharp contrast with Hoover-era policy, which saw protectionism and efforts to balance budgets and raise interest rates.
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