OECD Growth Projections May Impact ETFs

The OECD cut back its 2008 forecast for developing member countries and this could impact the performance of exchange-traded funds like Germany (EWG) and Sweden (EWD). At the same time it increased forecast for emerging countires like India (INP) and China (FXI).

In its twice-yearly Economic Outlook, the OECD forecast growth in the 30-nation area of an annual 2.1 per cent in the fourth quarter of 2008, down from its May projection of 2.7 per cent.

This would be the weakest performance since 2003, when the world economy was emerging from the fallout caused by the bursting of the technology bubble in 2000.

Jorgen Elmeskov, acting head of the economics department, said although the organisation had cut its growth forecasts "virtually everywhere in the OECD", the outlook was "actually not that bad in view of the recent shocks".

OECD cut its fourth quarter GDP growth projection from 2.7% to 2.1% for its 30 country members but raised number for China to 10.7% and India to 8.4%.