OECD upbeat on world economy

‘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.