The global economy is recovering faster than expected from recession with Asia leading the way, but it is at risk from huge debts in developed countries and possible overheating in countries such as China, the OECD said on Wednesday.
In a twice-yearly report, the Paris-based Organization for Economic Co-operation and Development raised its forecast for global growth to 4.6 per cent in 2010 and 4.5 per cent in 2011. Last November it predicted growth of 3.4 per cent this year and 3.7 per cent in 2011, after a 0.9 per cent contraction in 2009.
It was also far more optimistic about job markets globally, saying unemployment in its 31 member countries may have peaked at around 8.5 per cent – much lower than its previous prediction of almost 10 per cent.
The organization says the Canadian economy is rebounding “vigorously” from the recession trough, helped by a recovering trade sector and policy measures. It says the Bank of Canada “should start normalizing policy rate without delay and tighten gradually throughout the projection period.”
It sees growth in the Canadian economy of 3.6 per cent in 2010 and 3.2 per cent in 2011.
The new forecasts are higher than the average annual rate of growth in the decade before the financial crisis that spilled out of the United States in 2007 – an average of 3.7 per cent per annum over 1997-2006, according to OECD figures – but the OECD said the bounce was uneven and risk-prone.
The developed economies where the 2009 recession exacted the biggest toll were getting a lift from resurgent international trade, propelled primarily by export demand from rising economies in Asia, the OECD said.
It raised its forecast for U.S. growth this year and next to 3.2 per cent each time, from 2.5 and 2.8 per cent in its forecasts of last November.
It predicted Japanese growth of 3.0 per cent in 2010 and 2.0 in 2011, up from 1.8 and 2.0 per cent previously, and forecast the euro zone to lag with growth of 1.2 per cent and 1.8 per cent this year and next, still marginally more than forecasts of 0.9 and 1.7 per cent last November.
