São Paulo – The Organisation for Economic Co-operation and Development (OECD) disclosed yesterday (3) a report in which it says that the recovery of the world economy after the crisis should take place earlier than previously expected. "Given the positive economic news and based on incoming high-frequency indicators, OECD short-term forecasting models point to an earlier recovery than envisaged a few months ago," according to the text.
The organisation’s conclusions are similar to those published recently in an article by the chief economist of the International Monetary Fund (IMF), Olivier Blanchard, who said that the recovery of the economy has already started.
Among the good news, the organisation mentions several positive signs coming from financial markets, "some signs" of stabilisation of the US and British housing markets, the adjustment of company inventories, the probable acceleration of global trade and the resistance of large emerging nations to the effects of the crisis, especially China. "Recovery in economic activity [in large emerging markets] that began earlier this year is gaining momentum," according to the text.
According to the OCDE, the Gross Domestic Product (GDP) of the countries in the G-7, the group of seven main economies in the world, should retract 3.7% this year, a more optimistic forecast than that made by the organisation in June, which was for contraction of 4.1%. The report estimates better sceneries for Japan and the Euro Zone, the maintenance of projections for the United States, and a worsening for Great Britain.
As a result of this more favourable general situation, the text estimates improvement of the labour market.
The OECD points out, however, that the rhythm of expansion should be modest for some time. This scenery should be maintained for a large part of the coming year, according to the report.
The organisation does not hope for great growth of private demand for some time. This is due, according to the report, to the substantial spare capacity of industries, low profitability of companies, high levels of unemployment, "anaemic" growth of consumer income and "corrections" in the real-estate market. "At the same time, the need remains for households, businesses, financial institutions and governments to repair the damage to their balance sheets," says the text.
The OCDE states that governments need to continue stimulating their economies and adds that measures that have already been taken must be put in practice immediately. The report discards the risk of high inflation and recommends the maintenance, up to 2010 and "in some cases even beyond", of interest rates, which have reached very low levels in the central economies.
*Translated by Mark Ament
