No-one knows exactly what the economic consequences of the Katrina hurricane in the United States will be, but the OECD can offer some key observations, said Jean-Philippe Cotis, the OECD's chief economist, as he opened this media briefing held on 6 September to outline the OECD's 2nd interim economic assessment of the year, two months before the next OECD Economic Outlook.
The chief economist set out to answer three key questions: the extent of the oil shock; how it would affect economic momentum and forecasts as they stood just before Katrina; and possible economic policy responses.
Much depended on the level of resilience in individual economies, the chief economist said. He likened this to a rugby match: if you run with the ball and are fast and strong on your feet, you may well break through the tackles, but if you get off to a slow start and lack momentum, you could be brought down more easily.
Oil prices have soared by about $20 a barrel since the finalisation of the OECD Economic Outlook projections in May 2005, reaching new peaks, in nominal and also in real terms, the audience heard. Their cumulative run-up over the past two years matches, in absolute terms, the large shocks observed in earlier decades. Superimposed on the shock is the devastation wrought in recent days by hurricane Katrina, the macroeconomic impact of which cannot yet be gauged with any confidence.
To read the full media briefing paper, including graphs and tables which present the situation just before Katrina, please click the link below.
©OECD Observer September 2005