Economic group says developed world in recession

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The world's developed economies, hard hit by the financial crisis, have slid into recession and will shrink further in 2009, a top international organization said Thursday.

In its latest economic forecasts, the Paris-based Organization for Economic Cooperation and Development said gross domestic product was likely to fall by 0.3 percent in 2009 for its 30 member countries, representing democracies with market economies.

It said the U.S. economy would contract next year by 0.9 percent, Japan's by 0.1 percent and the euro area by 0.5 percent.

Additionally, it was the first time since 1974-5, when they were suffering from the Arab oil embargo and a severe bear market for stocks, that the U.S., Europe and Japan have fallen into recession.

This time, all three are shrinking in the same year; in the wake of the first oil price shock in 1973, Japan saw negative growth in 1974 followed a year later by the U.S. and Europe.

And it was the first time the organization has seen an aggregate shrinkage in its members economies since it started keeping records in 1970.

The latest forecasts represent a sharp downgrade since the last set in June, when the OECD forecast OECD growth of 1.7 percent in 2009 and indicated that the worst of the financial crisis might have passed. Since then though, the outlook for the world economy has deteriorated sharply in the wake of the banking crisis, which is rapidly spreading to the wider economy.

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