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November 20, 2009

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Home » Business » Economy

OECD doubles 2010 forecast

The world's rich and developed economies will grow faster next year, but recovery will remain modest, with the United States and Japan outpacing Europe, a Paris-based watchdog said yesterday.

The Organization for Economic Cooperation and Development more than doubled its estimate for 2010 growth in its 30-member countries -- which include the US, Japan, Germany and the United Kingdom -- to 1.9 percent.

Still, recovery is expected to remain fragile.

"In most OECD economies, growth is likely to fluctuate around a modest underlying rate for some time to come," said the organization's top economist Jorgen Elmeskov.

"It is being held back by still substantial headwinds. It is only some time down the line that the recovery will become sufficiently strong to begin to reduce unemployment."

The OECD also reduced the expected contraction this year to 3.5 percent from an earlier forecast of 4.1 percent. The organization publishes its economic outlook twice a year, although it updated some 2009 forecasts in an interim assessment published in September.

The US economy has been boosted by stimulus measures, improving financial conditions, demand from the fast-growing non-OECD economies of Asia -- especially China -- and the stabilization of the housing market, the OECD said.

It predicts the US economy will expand at a rate of 2.5 percent in 2010, up from a June forecast of 0.9 percent. It also expects a smaller contraction this year: a 2.5 percent fall in output compared with an interim September forecast of a 2.8 percent drop.

In Europe, the economies of the 16 countries sharing the euro are now expected to grow by 0.9 percent next year compared to a June forecast of zero growth. However, the OECD predicts a greater contraction of 4 percent this year, more than the 3.9 percent it calculated in September.

Japan's economy will grow by 1.8 percent next year compared with the June forecast of 0.7 percent.

The OECD reduced its prediction for a contraction this year to 5.3 percent compared to a 5.6 percent rate seen in September.


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