International Environment

World GDP grew at 2.2 percent in 2008, down from 3.8 percent in 2007, with growth in OECD countries substantially slower than growth elsewhere. GDP growth in OECD countries slowed to 0.9 percent in 2008, down from 2.7 percent in 2007. The slowdown began earlier and was more pronounced in the United States than elsewhere due to the fallout from the sub-prime housing loan crisis.

By and large, the OECD countries weathered relatively well a series of shocks in the form of financial market turmoil, declines in housing markets, and higher fuel and food prices in the first half of 2008, but the situation deteriorated rapidly towards the end of the year, rapidly spread to the rest of the world and has now taken on the proportions of a global recession. In December, prospects were for GDP in the OECD area to fall by 0.4 percent in 2009 and for growth to be a weak 1.4 percent in 2010, but they have worsened since then. At end-March, the OECD revised its forecast for OECD growth in 2009 to -4.3 percent and for growth to be near zero in 2010.