The Organisation for Economic Co-operation and Development (OECD) has projected a pick-up in India's economic growth, a moderate expansion in most major advanced and emerging economies and weaker growth in the euro area, which, it said, could run the risk of prolonged stagnation if further steps are not taken to boost demand.
The Paris-based OECD on Monday projected 5.7 per cent growth for the Indian economy this year and a 5.9 per cent growth in 2015, even as global recovery continues at a moderate pace.
"Growth in India is projected to pick up and Brazil will experience a modest rebound from recession... India will grow by 5.7 per cent in 2014 and 5.9 per cent in 2015," according to the OECD's latest Interim Economic Assessment.
In May OECD had projected India's economic growth in 2014 at 4.9 per cent against OECD's 2.2 per cent, rising to 5.9 per cent and 2.8 per cent respectively in 2015.
While growth will be strong enough to push unemployment down further in the United States, the United Kingdom and Canada, in Japan, where unemployment has already declined to low levels, the economy will grow broadly in line with its potential. China is expected to continue an orderly adjustment to still high but more sustainable growth rates.
OECD has projected a moderation in China's growth from 7.4 per cent in 2014 to 7.3 per cent in 2015.
Brazil will grow by only 0.3 per cent this year, having fallen into recession in the first half of the year, and 1.4 per cent next, according to OECD.
While emerging economies as a group will continue to grow much faster than the advanced economies, the forecasts are similarly uneven across countries.
The Paris-based organisation has projected growth in the euro zone at 0.8 per cent this year and rising only slightly next year to 1.1 per cent - a sizable downgrade from its May economic outlook for the euro zone, when it forecast growth of 1.2 per cent this year and 1.7 per cent next year.
Growth prospects differ widely among the major euro area economies. Germany is forecast to grow by 1.5 per cent in both 2014 and 2015, France by 0.4 per cent in 2014 and 1 per cent in 2015, while Italy will see a -0.4 per cent drop in 2014 and a gain of just 0.1 per cent in 2015.
The OECD projects that the US will grow by 2.1 per cent this year and by 3.1 per cent in 2015, while the UK is projected to grow at 3.1 per cent in 2014 and 2.8 per cent in 2015. Canadian growth is projected at 2.3 per cent this year and 2.7 per cent in 2015.
In May, it had forecast US growth at 2.6 per cent this year and 3.5 per cent next year.
Under the continuing influence of monetary stimulation, Japan is projected to grow by 0.9 per cent in 2014 and 1.1 per cent in 2015.
The OECD has urged the European Central Bank (ECB) to implement much more aggressive stimulus to ward off the risk of deflation in a subdued euro zone.
Presenting the Interim Economic Assessment in Paris, OECD deputy secretary-general and acting Chief Economist Rintaro Tamaki said: ''The global economy is expanding unevenly, and at only a moderate rate. Trade growth therefore remains sluggish and labour market conditions in the main advanced economies are improving only gradually, with far too many people still unable to find good jobs worldwide. The continued failure to generate strong, balanced and inclusive growth underlines the urgency of undertaking ambitious reforms.''
The OECD said that although euro zone inflation, at a five-year low of 0.4 per cent last month, should strengthen as demand recovered, low levels close to zero raised the risk of deflation.
With countries facing such diverging outlooks, macroeconomic policy needs are becoming increasingly diverse. ''The euro area needs more vigorous monetary stimulus, while the US and the UK are rightly winding down their unconventional monetary easing,'' Tamaki said. ''Japan still needs more quantitative easing to secure a lasting break with deflation, but must make more progress on fiscal consolidation than most other countries.''
The call to boost euro zone growth comes ahead of a meeting of finance ministers and central bankers from the Group of 20 (G20) economies later this week in Australia.
The US is set to push European countries at the G20 meeting to step up measures to boost demand and economic growth in the face of the risk of deflation, a senior official at the US Treasury said on Friday.