The Organization for Economic Co-operation and Development has joined the growing list of economic forecasters predicting protracted economic gloom in the developed economies.

The group said Thursday that it expects economic activity to fall by 0.9% in the United States next year, by 0.5% in the Euro area and by 0.1% in Japan as OECD countries enter a protracted slowdown. GDP for the OECD countries as a whole is expected to fall 0.3% year-over-year in 2009 before recovering slightly to grow by 1.5% in 2010.

The average unemployment rate in the OECD area, estimated at 5.9% this year, is forecast to climb to 6.9% next year and reach 7.2% in 2010. Inflation should continue to ease as economic slack puts downward pressure on prices and if, as assumed, commodity prices maintain their recent lower levels, it said.

Jorgen Elmeskov, director of policy studies in the OECD’s Economics Department, said a high degree of uncertainty surrounds the outlook. Much depends on the depth and duration of the financial crisis, the main driver of the current recession, he noted. And he added, “The ongoing adjustment in housing markets still has a long way to go.”

“Against this backdrop, additional macroeconomic stimulus is needed,” said Elmeskov.

IE