OECD warns of economic slowdown

The US economy will slow sharply in the first half of 2008, the OECD has warned, leading to weaker world growth.

The 30-nation group of top economies said that the risks of further financial turmoil could not be ruled out, but it expected recovery later.

The OECD said that strong company profits and high employment should moderate the effects of the slowdown.

But it said that rising commodity prices posed a dilemma for central banks who had cut interest rates.

The think tank for the world's leading economies said that the most likely outcome was a "relatively benign" scenario where growth "picked up speed" in the second half of 2008 and early 2009, especially in the United States.

Downside risks

But it warned that there were still a number of "downside risks" whose magnitude were hard to gauge.

*The financial turmoil that began over the summer has not yet played itself out
*Further declines in housing markets could hit more countries
*There is uncertainty as to how sensitive households and businesses might be to the higher cost and lower availability of credit
*Commodity prices could continue to rise
*There could be further sharp adjustments in exchange rates

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