The economic recovery seems to be at least temporarily losing pace in the developed world, where U.S. growth is set to outstrip expansion in Japan and Europe, the OECD said on Wednesday.
The Paris-based Organization for Economic Cooperation and Development, or OECD, published forecasts for the first and second quarters of 2010 that pointed to slower growth of gross domestic product than in the last part of 2009 across the big developed economies known as the G-7 group.
It predicted aggregate first-quarter growth of 1.9 percent in quarter-on-quarter, annualized, terms for the G-7 group, followed by 2.3 percent in the second quarter, which compares to the 3.7 percent growth rate registered in the last quarter of 2009.
"Economic activity gathered steam in most of the major OECD economies in the last quarter of 2009 with the notable exception of the euro area," the Organization for Economic Co-operation and Development said in a statement.
"Taking the most recent dataflow into account, the OECD short-term forecasting models suggest that growth is likely to slow down in the first half of 2010." The latest OECD update was limited to GDP for the first and second quarters.
Fuller macroeconomic forecasts for the OECD's 31 member countries, last issued in November 2009, will be updated in late May, OECD officials said.
The OECD said post-crisis normalization of policy interest rates "should be carried out at a pace that will be contingent on the strength of recovery in the individual countries and the outlook for inflation beyond the near-term projection horizon".
Similarly, governments needed to communicate clearly on plans to withdraw fiscal stimulus and that this process should begin in most cases in 2011.
Behind the G-7 aggregate, the OECD's forecasts showed the United States bouncing back from recession more convincingly than Japan and above all Europe.
It predicted U.S. growth of 2.4 percent, quarter-on-quarter, annualized, for the first quarter of 2010.
While that is higher than the 1.6 percent it was forecasting in November, it remains short of the 5.6 percent jump reported in fourth-quarter 2009.
Its second-quarter U.S. forecast was for much the same as the first, at 2.3 percent, quarter-on-quarter, annualized.
"The U.S. economy has proved to be resilient and is gaining speed on the basis of better financial conditions that are translating into better real conditions," OECD chief economist Pier Carlo Padoan told Reuters in an interview.
"It's (the U.S. economy) gaining from a trade pickup throughout the world and also of course fiscal stimulus — much better of course than the euro area," he said.
Much of the pickup in through trade linkages was thanks to strong activity growth in emerging market economies such as China, India and Brazil.
For Japan, the OECD predicted 1.1 percent GDP growth in the first quarter of 2010, quarter-on-quarter, annualized.
That was better than the 0.5 percent first-quarter GDP rise it was counting on in forecasts late last year but again weaker than the 3.8 percent GDP increase actually registered in the closing quarter of 2009.
For Germany, where GDP growth ground to zero in the fourth quarter of 2009, the OECD predicted a quarter-on-quarter GDP drop of an annualized 0.4 percent in the first quarter, and then a GDP gain of 2.8 percent annualized in the second quarter.
After a 1.3 percent GDP drop quarter-on-quarter in Italy on an annualized basis in the last quarter of 2009, the OECD said that it was expecting 1.2 percent and 0.5 percent GDP growth respectively in the first and second quarters.
For France, it saw a steadier run, with 2.3 percent growth in the first quarter and 1.7 percent in the second, after 2.4 in the last quarter of 2009, all in annualized quarter-on-quarter terms too.
Severe winter weather and the timing of the Lunar New Year in Asia made high-frequency indicators harder to decipher at the moment but other factors posed a risk to activity in the very near term too, the OECD said.
Support from the inventory cycle was set to begin to fade and some fiscal stimulus measures were expected to come to an end, it said.
"Private demand is poised to continue to suffer from sluggish credit growth and weak labor markets." Overall, considerable economic slack continued to dampen core inflation, the OECD said.
In Britain, the OECD said it saw first-quarter growth of 2.0 percent and second-quarter growth of 3.1 percent, after a fourth quarter 2009 rise of 1.8 percent in GDP, in quarter-on-quarter, annualized terms.
In Canada, it saw first-quarter growth of 6.2 percent and second-quarter growth of 4.5 percent, after a fourth-quarter 2009 rise of 5.0 percent, in quarter-on-quarter, annualized terms.
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