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Paris - The world is recovering robustly from the global downturn, but eurozone debt and a risk of overheating in emerging economies are dangers on the prowl, the OECD said on Wednesday.
The OECD's six-monthly review upgraded the global growth forecast for this year to about 4.75% after a shrinkage of 0.9% in 2009.
The signs of bounce back are being driven notably by emerging economies in Asia but the OECD also warned that imbalances between regions, widely held to have been a root cause of the global crisis, are rising again.
"Global output growth is expected to be around 4.75% this year and in 2011, above the growth rate experienced in the decade prior to the onset of the crisis," it said.
In its previous forecast in November last year, the OECD predicted growth in the global economy of 3.4% this year and 3.7% in 2011.
The organisation put growth in the United States this year at 3.2% and for the eurozone at 1.2%, signalling broadly a remarkable if still uneven recovery from the worst global economic crisis since the Great Depression of the 1930.
It also increased the outlook for Japan to 3.% from a contraction of 5.2% last year.
The recovery is widely attributed to rapid application of the lessons of that crisis. Action turned on massive stimulus from governments and central banks, and from the International Monetary Fund.
OECD secretary general Angel Gurria told a press conference that correction of public finances was now vital in many countries.
"We have been accused of being a little schizophrenic," he said, referring to the need to maintain recovery while also cutting crisis stimulus and public deficits. "We are trying to do both things at the same time."
Commenting on market volatility, he said: "Markets go and attack immediately as they see signs of weakness. That is why these announcements that have been made (of action on public overspending) ... are very important."
The report said: "Growth is picking up in the OECD area - at different speeds across regions - and at a faster pace than expected in the previous Economic Outlook."
Growth in the 30 OECD industrialised economies is expected to be far lower than for the world as a whole, at 2.70%, although higher than the last forecast in November of 2.50%.
The report forecast that Germany would achieve 1.9% growth, a radical switch from contraction of 4.9% last year, and France was on track for 2.0% growth.
The new British government had to focus on cutting a record public deficit, the OECD said, but Britain was also set to switch from a huge contraction to growth of 1.3% this year and 2.5% in 2011.
These forecasts, upgraded from the last OECD outlook in November, contrast with signals of alarm from financial markets in recent weeks at debt, and the risk that deficit cutting could tip countries back into recession.
However, the six-monthly report from the Paris-based Organisation for Economic Cooperation and Development suggested that such alarm may be overdone.
Consumers may have compensated already in anticipation by reducing their own spending, and the remaining effect could therefore be less than some experts forecast.
But the organisation warned that the debt crisis in Europe and overheating in emerging markets could endanger the global recovery.
The OECD also said that global imbalances - meaning trade imbalances and mismatches in capital flows - are widening again.
It said that "risks to the global recovery could be higher now, given the speed and magnitude of capital inflows in emerging-market economies and instability in sovereign debt markets.
"Overheating in emerging-market economies... poses a serious risk. A boom-bust scenario cannot be ruled out," it added.
Countries such as China and India, it said, may need "much stronger" monetary tightening to counter inflation.
The report insisted that OECD governments should take "urgent" action to curb spiralling government debt levels.
"Exit from exceptional fiscal support must start now, or by 2011 at the latest."
Referring to the eurozone's debt problems, it said that procedures need to be reinforced in order to prevent another crisis. It went so far as to float the idea of common eurozone tax management.
The report added that banks in OECD countries remained "vulnerable", the OECD said.
It also said that the unemployment rate in OECD countries "may now have peaked" but there was little chance of strong employment growth soon.
- AFP
