World economy gets back in shape - OECD
November 20, 2009
By Sapa-AFP Paris
China, the rest of Asia and the US were pulling the world out of an economic vortex with surprising if "modest" speed, the Organisation for Economic Co-operation and Development (OECD) declared yesterday.
Asian economies underpin the recovery, and the US is in the midst of a sudden rebound, switching to expected 2.5 percent growth next year from 2.5 percent shrinkage this year.
But leading economies are now in an exit dilemma over huge debt and rescue spending.
The recovery was uneven, unsteady and unpredictable, the OECD said.
This assessment was mirrored earlier by US President Barack Obama in comments during his Asian trip on the need to support recovery but contain debt.
He said it was important to recognise "that if we keep on adding to the debt, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a way that could actually lead to a double-dip recession".
The OECD report on the global outlook concealed a big surprise in a table of data showing that at the current rate of recovery, worldwide activity will be back to normal within 25 months' time.
"The upturn in the major non-OECD countries, especially in Asia and particularly in China, is now a well-established source of strength for the more feeble OECD recovery," the report said.
The major issue "in many of these countries is now becoming one of withdrawal of stimulus so as to avoid igniting asset or general price inflation".
The US economy will shrink by 2.5 percent this year, but make a big leap to growth of 2.5 percent next year and 2.8 percent in 2011, according to OECD's forecast.
The euro zone will shrink by 4 percent this year, and then grow by 0.9 percent and 1.7 percent next year and in 2011.
Japan is heading from shrinkage of 0.7 percent last year and recession of 5.3 percent this year to growth of 1.8 percent in 2010 and then 2 percent next year.
But the deeper underlying, medium-term story lies in OECD estimates for what it calls "world growth" for its 30 leading industrialised members plus China, India, Russia and Brazil.
World growth in 2011 will be 3.7 percent, about the same as the average in the decade up to 2006, the group predicts.
|
|
