OECD raises global growth forecast

The pace of global economic growth is picking up faster than expected, but the recovery process could be hit by the ongoing euro-zone debt crisis and overheating in countries like China, the Organization for Economic Cooperation and Development (OECD) said. In its twice-yearly economic outlook, the Paris-based organisation for industrialised nations raised its forecast for global growth to 4.6% in 2010 and 4.5% in 2011. Last November, it predicted growth of 3.4% this year and 3.7% in 2011, after a 0.9% contraction in 2009. "Strong growth in emerging-market economies is contributing significantly," the OECD said. "The spillover from growth in non-OECD Asia could be stronger than expected, especially in the United States and Japan. From this point of view, the overall environment is relatively auspicious." the Paris-based organisation said.

Gross Domestic Product (GDP) across member countries will rise by 2.7% this year and 2.8% in 2011, up from November's forecasts for 1.9% growth this year and 2.5% growth in 2011, the OECD said. "Instability in sovereign debt markets poses a serious risk. It has highlighted the need for the euro area to strengthen its institutional and operational architecture and take bolder steps to ensure fiscal discipline," the OECD said.

The OECD raised its forecast for US economic growth in 2010 and 2011 to 3.2% each, from 2.5% and 2.8% in its forecasts of last November. Japan's growth will be 3% in 2010 and 2% in 2011, up from 1.8% and 2% previously. The euro-zone will lag with growth of 1.2% and 1.8% this year and next, still marginally more than forecasts of 0.9% and 1.7% announced in November 2009. For China, the OECD forecast economic growth of 11.1% this year and 9.7% in 2011, saying there was a danger that measures to cool property markets and curb land prices would not see off the risk of overheating. In November, the OECD had forecast Chinese growth of 10.2% in 2010 and 9.3% in 2011.