The global recession is coming to an end faster than thought a few months ago and may already be over, but recovery will rely on massive government spending and low interest rates for some time, the OECD said on Thursday.
The Organization for Economic Co-operation and Development issued forecasts showing a broad return to economic expansion in the third quarter of 2009.
The recovery might prove a little stronger than previously predicted, OECD chief economist Jorgen Elmeskov told Reuters in an interview where he elaborated on the forecasts for several key economies.
The OECD forecasts show a third-quarter return to annualized quarter-on-quarter growth in the United States of 1.6 percent, 1.1 percent in Japan, and 0.3 percent in the 16-country euro zone, led by its two largest economies, Germany and France.
TURNING POINT FOR G7
While it predicted continued third-quarter contractions in Britain and Italy, and a rise followed by a fourth-quarter dip for Japan, the OECD said the broad picture for the G7 group of industrialized powers was better.
The forecasts, including information up to Sept 2, show the euro area turning positive in both of the last two quarters of 2009 after five straight quarters of contraction.
The OECD now expects 2 percent annualized growth in the euro zone in the fourth quarter, compared with its June prediction for a 0.5 percent contraction.
On Thursday, the European Central Bank raised its staff projections for euro zone GDP this year and next, predicting growth in 2010 of between -0.5 percent and +0.9 percent.
The previous OECD growth forecasts for the United States had been zero and 0.5 percent for the third and fourth quarters -- now upped to 1.6 percent and 2.4 percent respectively.
It sees annualized GDP rises of 1.2 and 1.4 percent in the third and fourth quarters for the G7 as a whole, also signaling an exit from recession at that level.
(OECD-Organization for Economic Co-operation and Development)
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