OECD sees improving outlook for advanced economies

The Organisation for Economic Cooperation and Development (OECD) today said that led by firm US growth, outlook was gradually improving for advanced economies even as crisis-weary Europe was at last joining the recovery.

Nevertheless a slowdown in many emerging economies meant that global growth would continue to remain sluggish, the OECD added.

According to Pier Carlo Padoan, who spoke to Reuters, the bottom line was that advanced economies were growing more and emerging economies were growing less.

Among major economies, the US would lead the recovery with 1.7 per cent growth this year according to the think tank, as it cut its estimate from a May forecast of 1.9 per cent.

With massive monetary stimulus from the central bank, Japan seems set on the growth course this year of 1.6 per cent, unchanged from the May forecast by OECD.

Meanwhile Europe, which in recent years, has been a drag on growth struggling with its debt crisis, at last offered recovery prospects with signs of an uptick in France and Germany that led to the OECD raising its forecasts for them.

Growth in France is expected around 0.3 per cent this year, up from 0.3 per cent contraction in the OECD's May forecast. Meanwhile, Germany, the biggest economy in Europe is likely to grow 0.7 per cent, up from 0.4 per cent previously.

According to the OECD, the US, the UK and Japan were growing ''at encouraging rates,'' even as the euro zone emerged from six straight quarters of contraction in the April-June period.

The uptrend would continue, recent indicators from the major advanced economies suggested, including increased business confidence and stronger industrial production.

The US economy would probably see growth at a 2.5 per cent annualised rate in the third quarter and 2.7 per cent in the fourth, according to the report. The US economy expanded 2.5 per cent in the second quarter.

Japan would clock growth of 2.6 per cent in the third quarter and 2.4 per cent in the fourth quarter, in line with the 2.6 per cent second quarter figure, according to the organization.

According to commentators the OECD outlook held no major surprises and appeared to be consistent with mainstream private and official forecasts.

The organisation's assessment of the jobs market though was decidedly downcast. It added unemployment, currently at high levels across the developed world, could become entrenched, with long-term joblessness becoming structural unemployment, with the potential to ''remain even as the recovery takes hold.''