Eurozone more vulnerable to oil crisis than U.S. and Japan

According to the OECD (Organisation for Economic Cooperation and Development) soaring energy prices could hit the Euro area and the United Kingdom worse than the United States and Japan.

The full impact on the world economy of the devastation wrought by Hurricane Katrina in the main US oil-producing area of the Gulf of Mexico "cannot yet be gauged with confidence," the OECD said, urging the European Central Bank to adopt an expansionary monetary policy to avert an economic downturn, AKI reports.

"Oil prices have soared by about 20 dollars since our projections in May, reaching new peaks, in nominal but also in real terms," said OECD's chief economist Jean-Philippe Cotis. How the three main economic areas absorb the oil shocks depends on their underlying momentum" - which is stronger in the US and Japan than in the Eurozone - and on the policies governments adopt, he added.