OECD Raises Economy Outlook for First Time in Two Years on U.S

Bản báo cáo mới này tát vào bản báo cáo của World Bank hôm trước. Hài vãi

June 24 (Bloomberg) -- The Organization for Economic Cooperation and Development raised its forecast for the economy of its 30 member nations for the first time in two years as the U.S. slump shows signs of easing.

The combined economy of the world?Ts most-industrialized countries will shrink 4.1 percent this year and grow 0.7 percent in 2010, the Paris-based group, which was founded in 1961 to coordinate international economic policies, said today. The new projections compare with March forecasts for contractions of 4.3 percent and 0.1 percent.

The improved outlook conflicts with that of the World Bank, which this week said the global recession will be deeper than it predicted three months ago. In anticipating a weak recovery staggered across different economies, the OECD signaled that the Federal Reserve and Bank of Japan should not raise interest rates before 2011 and recommended the European Central Bank cut its benchmark further.

?oIt looks as if the worst scenario has been avoided and that OECD economies are now nearing the bottom,? Jorgen Elmeskov, the OECD?Ts acting chief economist, said in the report. ?oThe need for determined policy action remains.?

The U.S. economy was largely responsible for the OECD?Ts prediction that the global recession will reach its bottom in the second half of this year. The world?Ts largest economy will contract 2.8 percent this year and grow 0.9 percent next year, the organization said in revising its forecast from declines of 4 percent in 2009 and zero growth in 2010.

U.S. Rates

?oSigns have multiplied that U.S. activity could bottom out in the course of the second half of this year,? Elmeskov said. A sluggish recovery suggests the Fed does not need to begin raising its key interest rate from close to zero until 2011, the organization said.

The moderating U.S. slide will help offset weakness elsewhere as the OECD cut its 2009 predictions for Europe and Japan, while raising them for next year. Japan?Ts economy will shrink 6.8 percent this year rather than the 6.6 percent envisaged in March, before growing 0.7 percent in 2010 instead of shrinking 0.5 percent, the organization said.

Even as Japan?Ts slump shows signs of nearing its end, a slow rebound and excess capacity are ?olikely to further entrench? deflation, Elmeskov said. The organization said the Bank of Japan should better communicate its intention to keep its main interest rate low and hold it at 0.1 percent beyond next year.

European Joblessness

In the 16-nation euro-area, signs of a recovery are not as clear, the OECD said, as it cut its 2009 forecast to show a contraction of 4.8 percent compared with 4.1 percent in March. Even though it no longer anticipates a 0.3 percent decline next year, it still predicts stagnation as rising unemployment makes consumers reluctant to spend.

That ?ogrim outlook? and falling inflation means the ECB should start ?oexhausting the remaining scope? for cutting its benchmark rate from 1 percent, the OECD said.

The OECD?Ts new outlook comes two days after the World Bank said the global economy will contract 2.9 percent this year, compared with a previous forecast of a 1.7 percent decline. Today?Ts report echoes the view of the International Monetary Fund which now forecasts worldwide growth next year of 2.4 percent, up from April?Ts 1.9 percent estimate.

The organization said evidence of a recovery in China, which is not a member of the OECD, was already apparent, with the economy expected to grow 7.7 percent this year and 9.3 percent in 2010. The OECD previously projected expansions of 6.3 percent and 8.5 percent respectively. The government still has room to spend on social programs, the OECD said.

Brazil, India

The Brazilian economy will shrink 0.8 percent this year, more than the 0.3 percent forecast in March, before growing 4 percent next year, up from a 3.8 percent estimate, the OECD said. The organization also raised growth predictions for India to 5.9 percent and 7.2 percent this year and next.

Such emerging market recoveries mean trade will soon stabilize and begin to accelerate by the end of the year, the OECD said. It predicted global trade will expand 2.1 percent next year after plunging 16 percent this year

While risks to the forecasts are ?omore balanced? than before, the recovery is unlikely to be strong enough to reverse rising unemployment, the OECD said. It projected joblessness in its economy will average 9.9 percent at the end of next year, topping 10 percent in the U.S. and reaching 12 percent in the euro-area.

Threats Remain

That will contain inflation which it expects to average 0.6 percent this year and 0.8 percent in 2010, compared with 3.2 percent last year, it said.

Threats to the recovery include another deterioration in the financial system, especially if deflation takes hold, rising bond yields as government budget deficits surge and a retrenchment by consumers amid job cuts, the OECD said.

To encourage the rebound, central banks should maintain unconventional policies such as buying assets until growth is assured and the financial system has normalized, the OECD said. They should consider pledging to maintain loose monetary policy until certain criteria are fulfilled, it said.

Governments that can ease fiscal policy further should do so, the OECD said, identifying Germany, Canada and Switzerland. By contrast, it said debt in Japan, Italy, Ireland, Greece and Iceland prevented further fiscal stimulus. The OECD projected an average budget deficit of 8.8 percent of gross domestic product next year, up from 3.2 percent in 2008, with gaps in the U.S., the U.K., Spain and Ireland exceeding that level.

Testing Banks

Governments should also run stress tests on banks, whose balance sheets remain ?ohazy,? the OECD said. The tests should be ?oseen as challenging, be made public and be associated with demands for recapitalization where needed.? Governments in Europe have so far resisted following the U.S. in subjecting individual banks to public examinations.

Policy makers should prepare to reverse crisis policies when the economy and markets return to normal, the OECD said. For central banks, the ?otiming and calibration? of withdrawing liquidity ?owill be tricky,? it said.