OECD reports economic growth slowed during fourth quarter

Feb. 21 (UPI) -- Pointing to higher inflation, elevated interest rates, and the war in Ukraine in some cases, the Organization for Economic Cooperation and Development on Tuesday said economic growth for member states moderated in the fourth quarter.

The OECD said gross domestic product for its 22 member states expanded by 0.3% during the three-month period ending in December, down from the 0.4% growth rate during the third quarter.

"Quarterly OECD growth rates have remained weak throughout 2022 in a context of high inflation and rising interest rates," its statement read.

Ireland turned in the strongest growth rate of any member, with a 3.5% expansion during the fourth quarter. Growth in both Germany and Italy, however, contracted. The United States, the world's largest economy, expanded by 0.7%, according to OECD estimates.

"I'm happy to report that the state of the union and the state of our economy is strong," U.S. President Joe Biden said in early February.

But a strong labor market and resilient consumer spending is putting pressure on the economy. Policymakers at the U.S. Federal Reserve are trying to control lingering inflationary pressures by increasing borrowing rates, which could stifle the economy to the point that it enters a formal recession.

The U.S. Conference Board said Friday that a leading index on the trajectory of the U.S. economy is pointing toward a recession, with expectations of lackluster consumer spending going forward.

The pressure is no less severe in Europe as the European Central Bank is expecting inflation to linger at around 6.3% for the year, closely matching current levels in the U.S. economy. Central bank officials are targeting an inflation rate closer to 2% on an annual basis.

"Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations," the ECB stated Friday.

The war in Ukraine, meanwhile, is taking a toll on the economies of Eastern Europe, with Poland showing a 2.4% contraction in GDP during the fourth quarter. Lithuania's economy cooled by 1.7% during the three-month period ending in December.

Nevertheless, the OECD said that overall economic performance for its member states was better than during the same period in 2019, before the onset of the COVID-19 pandemic.