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PARIS — The world economy is headed for an earlier recovery than previously forecast, although the pace of the rebound will likely remain modest for some time to come, the OECD said Thursday.
The Paris-based watchdog of industrialized nations said recessions this year in Japan and the euro zone will be less severe than the organization forecast in June, while the outlook for the U.S. is stable.
Presenting the interim outlook at a news conference in Paris, the OECD's top economist, Jorgen Elmeskov, cited improving financial conditions, a rebound in trade and an end to inventory destocking by industry as factors pointing to faster economic recovery in the OECD's 30 member countries.
However, the recovery remains fragile, Elmeskov said.
"Recovery looks to be at hand for the OECD economy at large, but it's important not to get carried away," Elmeskov said. "The green shoots need careful nurturing by policy, if they are to become strong sustainable plants."
Elmeskov said the recovery would probably be bumpy, with ups and downs. "There's not a letter in our alphabet that really describes the shape of the recovery we forecast," Elmeskov said. "It will be something between and 'L' and a 'V'," he added.
The Organization for Economic Cooperation and Development now expects the Group of Seven leading industrial countries to contract by 3.7 percent this year, compared to the 4.1 percent contraction the organization forecast in June.
In Europe, the economies of the countries sharing the euro are now expected to contract by 3.9 percent this year compared to the OECD's June forecast of a 4.8 percent drop. Japan's economy will shrink by 5.6 percent this year, the OECD said, compared to the previous outlook of a 6.8 percent contraction. The U.S. economy, meanwhile, is still expected to shrink by 2.8 percent this year, unchanged from the June forecast.
Economic recovery remains threatened by high levels of unemployment in OECD countries, Elmeskov said.
"The risk is that unemployment saps consumer morale and spending," Elmeskov said, adding that the OECD's new forecasts foresee a further rise in joblessness.
