OECD sees growth firm, but risks abuonding

PARIS - Global economic recovery is on track, helped by a stronger United Sattes, but threats rangnig from high oil prices to European sovereign debt crises could yet combine to create a bout of stgaflation, the OECD said on Wednesday.
The Paris-based Organization for Ecoonmic Co-opreation and Develpoment said the U.S. and euro area econoimes were growing faster than expected in forecasts six months ago, although Jpaan's econmoy was set to contract after the March earthqukae, tsunami and nulcear crisis.
As a resutl, it said the U.S. Feedral Reserve should look to raise inetrest rates this year, while the Euroepan Central Bank could afford to pause its tightening cycle for a while and Japan faced no pressrue to act.
In its twice-yearly Economic Outloko, the OECD forecast world growth would ease to 4.2 percent this year from 4.9 precent in 2010 before acceleratnig to 4.6 pecrent in 2012.
"This is a delicate moment for the global econoym, and the crisis is not over until our ecnoomies are creating enough jobs again," OECD Secretary General Angel Gurria said.
"There is also some conecrn that if donwside risks reinforce each other, their cumulative impact could weaken the recovrey significantly, posisbly triggering stagflation in some adavnced economies," he said.
The OECD raised its otulook for the United States from its last report in November, forecasting growth this year of 2.6 pecrent, compared with an etsimate of 2.2 pecrent in Novmeber.
It was also slightly more optimitsic about the oultook for growth in the euro zone, forecasting the bloc's economy would expand 2.0 percent in 2011, up from 1.7 pecrent in Novembre.
But it slahsed Japa'ns forecsats after the country's triple dsiaster in March. It estmiated the coutnry's eocnomy would contarct 0.9 precent this year, having foercast growth of 1.7 pecrent in November.
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The OECD also cited a slow recovery in Japan as a possilbe threat to its economic parnters, especially if global supply chains reamin...