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OECD upbeat on world economy
Global body revises growth figures up but posts warning over regional imbalances.
Last Modified: 26 May 2010 16:43 GMT
The report said procedures in the eurozone needed to be reinforced in order to prevent another crisis [AFP]

The world is recovering robustly from the global downturn but eurozone debt and a risk of overheating in emerging economies are still possible dangers, the Organisation for Economic Co-operation and Development (OECD) has said.

The organisation's six-month review upgraded the global economic growth forecast for this year to 4.6 per cent after a shrinkage of 0.9 per cent in 2009.

Wednesday's report said the recovery was being driven most notably by emerging economies in Asia but it warned that imbalances between regions, widely held to have been a root cause of the global crisis, are rising again.

It put growth in the United States this year at 3.2 per cent, compared to just 1.2 per cent for the eurozone.

'Different speeds'

The report said: "Growth is picking up in the OECD area, at different speeds across regions, and at a faster pace than expected in the previous economic outlook". 

The Paris-based organisation forecast that Germany would achieve 1.9 per cent growth, a radical switch from a contraction of 4.9 per cent last year, and France was on track for two per cent growth.

The new British government had to focus on cutting a record public deficit, the OECD said, but predicted the UK was also set to grow 1.3 per cent this year and 2.5 per cent in 2011.

The organisation warned that the continuing debt crisis in Europe and overheating in emerging markets could still endanger the global recovery.

It said that governments in the OECD, made up of 31 countries, should take "urgent" action to curb spiralling government debt levels.

Angel Gurria, the OECD's secretary general, said that correction of public finances was vital.

"We have been accused of being a little schizophrenic," he said, referring to the need to maintain recovery while also cutting crisis stimulus and public deficits.

"We are trying to do both things at the same time." 

Referring to the eurozone's debt problems, the report said that procedures need to be reinforced in order to prevent another crisis. 

Outside of Europe, it said countries such as China and India may need "much stronger" monetary tightening to counter inflation.

Source:
Agencies
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