The Organisation for Economic Co-operation and Development has updated its growth forecasts of its member countries for 2012 and now expects 1.6% growth followed by 2.2% in 2013.

Developed countries make up most of the OECD but it also includes developing countries like Mexico and Turkey. Estimates for the eurozone are -0.1% this year and an increase of 0.9% in 2013. The US is predicted to grow by 2.4% and 2.6% in 2012 and 2013 respectively.

In the meantime, the preliminary purchasing managers index (PMI) for the 17-nation eurozone indicated that private-sector output contracted in May at the sharpest rate since mid-2009.

The composite PMI fell to a 35-month low of 45.9 from 46.7 in April. A reading of less than 50 signals a contraction in activity. The services PMI reading for the region fell to 46.5 from 46.9 in April, while the manufacturing PMI dropped to 45.0 from 45.9.

In the UK, the economy contracted more than initially estimated, leading to a deeper slump. According to the Office for National Statistics, GDP fell 0.3%, compared with the 0.2% drop estimated last month.

The fall is attributed to a revision in construction output. Services output and production output were unchanged.

The Bank of England is now in a better position to justify a restart of bond purchases.

Finally, in the US, lower borrowing costs and an improving jobs market gave a boost to home sales as home values in 20 cities fell in the 12 months to March at the slowest rate in over a year.

The S&P/Case-Shiller index of property values fell 2.6% from a year previously after a 3.5% drop in February. This decline was in line with median forecast of economists surveyed by Bloomberg News. The index rose from the prior month on a seasonally adjusted basis.

This article was compiled by Bank of Valletta for general information purposes only.