PARIS, 7 December 2007 — After months of turmoil on financial markets and fears about recession in the United States, the OECD sent a reassuring message to industrialized countries yesterday: growth is slowing, but don’t panic. The influential Paris-based organization said the world economy had been hit recently by a series of “shocks,” from falling equities and credit problems to high oil prices and softening housing markets.

But the key theme was that after years of expansion in the 30 member countries of the OECD, which account for 60 percent of world gross domestic product, their economies would strain in the headwinds but would not buckle. “Although near-term growth has been revised down virtually everywhere in the OECD area, the baseline scenario depicted ... is actually not that bad in view of recent shocks,” said the OECD’s acting chief economist, Jorgen Elmeskov.

The Organization for Economic Cooperation and Development, a government-funded economics body grouping 30 industrialized nations, issued the forecast in its latest “Economic Outlook” report.

Growth of the OECD economy, which includes North America, most of Europe, Japan and Australia among others, would be 2.7 percent this year and 2.3 percent next. The figure for 2008 was a sharp downward revision from a previous forecast of 2.7 percent, made in May, and the prediction of growth in the United States was also slashed to 2.0 percent from 2.5 percent.

Crucially however, the US economy, the world’s biggest, would avoid recession despite weakness in the housing market, where house prices and construction are falling after a surge in home loan defaults.

“Accelerated adjustment in the US housing sector that will drag down growth to low levels in the near term, but will not trigger a recession and will only modestly push up unemployment,” Elmeskov said.

The downward revision of growth projections is in line with action by private sector economists and the International Monetary Fund, which cut its forecast for world 2008 growth by 0.4 percentage points to 4.8 percent in October.

The Washington-based institution has warned of another downward revision as turmoil on global financial markets continues. The OECD also said that their main, generally benign scenario could be subject to revisions if housing market difficulties intensified or financial market turmoil continued unabated.

On interest rates, the OECD urged central banks to stay on hold and praised moves either to cut borrowing costs — in the United States for example — or refrain from raising rates — such as the European Central Bank. The OECD, a policy forum for industrialized countries which promotes globalization, free markets and competition, also warned about the dangers of protectionism amid stalling efforts to complete a new global trade deal and growing fears about sovereign wealth funds.

The Doha round of World Trade Organization talks are deadlocked with no breakthrough in sight, despite the hopes of WTO Director General Pascal Lamy of an agreement before end-2008.

Sovereign wealth funds are investment funds set up by major exporting countries, notably China and Middle Eastern oil producers, to invest their reserves in financial assets. They are becoming bigger in scale and are increasingly looking at foreign companies and shares. The OECD noted proposals in Germany, the US, Canada and Japan for greater screening of foreign takeovers to check for national security issues that would justify blocking sovereign funds.