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Eurozone 'more Exposed Than Us To Economic Harm

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Eurozone 'more exposed than US to economic harm from Katrina'

By Gary Duncan

FLIMSY recovery in the eurozone leaves it more exposed to the economic toll from record oil prices and Hurricane Katrina than the buoyant United States, the Organisation for Economic Co-operation and Development (OECD) said yesterday.

The think-tank said that it was still impossible to gauge the full economic repercussions of Katrina. It left its forecast for US growth this year unchanged, at 3.6 per cent, and raised its projection for the eurozone slightly, to 1.3 per cent, from 1.2 per cent.

However, Jean-Philippe Cotis, the OECD’s chief economist, gave warning that the greater underlying strength of American conditions meant that the US is less vulnerable to economic fallout from the combination of rising energy costs and the hurricane than is the eurozone — despite the immediate impact on America.

M Cotis, updating the OECD’s world outlook, said: “In the US, if we take an optimistic scenario, the hurricane could lead to a slowdown, but in relation to an economic situation which was on a strong path, whereas in the eurozone, the growth was far more fragile, more modest.”

Comparing the size of the jump in crude oil prices to the oil shocks of the 1970s, M Cotis said the OECD believed that “elevated prices may be here to stay for some time”. He said: “There is a major shock and there is no evidence it has reached its conclusion.” Both the US and the eurozone were “paying a very high price for the ‘Not in my backyard syndrome’, which had prevented the building of new refinery capacity”, he added. No new refineries had been built in America since 1976.

M Cotis suggested that the US Federal Reserve should ease off in its campaign of increases in American interest rates, after ten consecutive rises. Although the OECD thought that US rates should still rise, it implied that the Fed should move more gingerly.

M Cotis said a “chronic demand deficit” meant that there was no case for any increase in rates by the European Central Bank for some time.


Hurricane Katrina could have the effect of slowing US economic growth by around a half-percentage point this year, the US Treasury Secretary said last night. John Snow also forecast that stimulus to the economy from rebuilding efforts would raise growth by half a percentage point in 2006.

Brit Insurance said that the cost of Katrina to the insurance industry was likely to top $50 billion (£27 billion), making it by far the most expensive natural disaster it has yet faced.

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Guest Riser

Looks like it could be Florida's turn next, two storms heading their way, any oil rigs around there ?

Just found another interesting site:

Florida Hurricane


Edited by Riser

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Three tropical storms/hurricanes currently in the North Atlantic: Maria, Nate and Ophelia. Activity is really increasing.


NOAA: August 2005 Update to Atlantic Hurricane Season Outlook

For the 2005 Atlantic hurricane season the outlook calls for an extremely active season, with the seasonal ACE index forecasted to range from 180%-270% of the median. This range is above the 175% baseline that Goldenberg et al. (Science, 2001) use to define a hyperactive season. The outlook also calls for a seasonal total of 18-21 tropical storms, with 9-11 becoming hurricanes, and 5-7 of these becoming major hurricanes [categories 3-4-5 on the Saffir-Simpson scale]. Because the ACE index does not directly account for the numbers of tropical storms, hurricanes, and major hurricanes, the predicted ACE range can verify even if these numbers fall outside their predicted ranges.

Even though there has already been considerable early season activity (7 tropical storms, with two becoming major hurricanes), most of the activity is still expected to occur during the climatological peak months of August-October.


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  • 301 Brexit, House prices and Summer 2020

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