The global recession is coming to an end faster than thought just a few months ago and may already be over, according to forecasts published by the Organisation for Economic Co-operation and Development today.
The recovery may even prove a little stronger than previously predicted, OECD chief economist Jorgen Elmeskov said in an interview where he elaborated on the forecasts for several key economies. "Compared with expectations a few months ago, we now have a recovery which ... may be coming a little earlier and it may be slightly stronger because financial conditions have improved more rapidly than we assumed a few months ago," Mr Elmeskov said.
The OECD forecasts show a third-quarter return to expansion of economic output, as measured by gross domestic product, in the United States and the 16-country euro zone, led by its two largest economies, Germany and France.
The forecasts showed an annualised expansion of 1.6 per cent in the United States in the third quarter, 0.3 per cent in the euro zone and 1.1 per cent in Japan, and were generally more optimistic than the last update in June.
The pickup that started with a "quite dramatic turnaround" in China and other Asian emerging market economies in the second quarter remained heavily dependent on government stimulus and ultra-low interest rates across the world, Mr Elmeskov said.
The OECD's 30 member countries do not include rising powers such as China but do include the long-industrialised ones where the trouble began in 2007 as the credit and housing boom in the United States turned to bust, triggering a crisis in banking and financial markets that infected the real economy.
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 industrialised powers was better.
The forecasts, including information up to September 2nd, show the euro area turning positive in both of the last two quarters of 2009 after five straight quarters of contraction.
In June, it predicted quarter-on-quarter shrinkage of 1.1 and 0.5 per cent respectively in the third and fourth quarters on an annualised basis.
It now expects 2 per cent growth in the fourth quarter. The previous forecasts for the United States had been zero and 0.5 per cent - now upped to 1.6 per cent and 2.4 per cent respectively.
The OECD is still predicting GDP contractions for 2009 as a whole across the G7 group, primarily because of a particularly bad first half, despite the improvement now in the pipeline.
Reuters