PARIS – The Organization for Economic Cooperation and Development (OECD) today issued its brightest forecast in two years for the economies of the U.S. and its 29 other member nations, Bloomberg News reported.
The OECD, which assists the 30 developed nations in coordinating policy, said it expects their economies to contract by 4.1 percent this year and grow by 0.7 percent in 2010, Bloomberg said. That was an improvement over its March forecast of a 4.3 percent contraction this year and 0.1 percent growth next year.
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“Economic activity in the OECD countries is reaching bottom,” OECD Secretary General Angel Gurria said at a news conference in Paris, where the group is based, Bloomberg reported. “We foresee a recovery that will be rather slow and fragile for some time.”
An improved outlook for the U.S. economy, the largest in the world, was the key driver of the OECD’s improved forecast. The organization now expects the U.S. economy to shrink by 2.8 percent this year and grow by 0.9 percent next year. In March, the OECD had predicted the U.S. economy would experience a 4 percent contraction this year and no growth in 2010.
By contrast, the OECD issued more negative predictions for the economies of Europe and Japan.
“Signs have multiplied that U.S. activity could bottom out in the course of the second half of this year,” Jorgen Elmeskov, the OECD’s acting chief economist, was quoted as saying by Bloomberg. But he added that the Federal Reserve should keep its benchmark interest rate near zero until 2011.
The OECD’s forecast contrasts with that of the World Bank, which earlier this week downgraded its analysis of the global economy’s outlook. Economist there predicted that the world economy will contract 2.9 percent this year, more than they had expected in March when they predicted a global contraction of 1.7 percent.
