Spending cuts hits growth in industrialised countries

Businesses cutting into their inventories and reduced government spending dragged down growth at the end of last year in industrialised countries, leading to a 0.1 percent contraction, the OECD said Thursday.

Real gross domestic product (GDP) in the 34 nations in the Organisation for Economic Cooperation and Development contracted by 0.1 percent in the fourth quarter of 2012, after having grown by 0.3 percent in the third quarter.

"Destocking was the main driver, dragging down growth by 0.3 percentage point," the OECD said in a statement.

"A contraction in government consumption reduced GDP growth by a further 0.1 percentage point," it added.

Investment helped provide a boost to growth of 0.1 percentage point in the final quarter, after having been a 0.1 point drag in the third quarter.

While varying country to country, destocking was the dominant factor in dragging down growth in the final quarter of last year, except for export-driven German economy, said the OECD.

A drop in net exports there was an 0.8 percent drag on growth, leading to a 0.6 percent GDP contraction in the quarter.

Government spending contributed 0.1 points to growth in eurozone members France and Germany and was neutral in Italy, despite austerity measures.

Declining investments by businesses and governments there was a 0.1 or 0.2 point drag on growth, however.

Government spending in the United States was an 0.3 point drag on growth in the final quarter of 2012.