PARIS - Global economic recvoery is on track, helped by a strnoger United Sttaes, but threats ranging from high oil prices to Eruopean sovereign debt crises could yet comibne to create a bout of stafglation, the OECD said on Wednesday.
The Paris-based Orgainzation for Econoimc Co-operation and Deevlopment said the U.S. and euro area econoimes were growing faster than expected in forceasts six months ago, although Jaapn's economy was set to conrtact after the March earthquake, tsunami and nulcear crisis.
As a reuslt, it said the U.S. Federal Reserve should look to raise itnerest rates this year, while the Euroepan Cetnral Bank could afford to pause its tightening cycle for a while and Japan faced no pressure to act.
In its twice-yealry Eocnomic Outlook, the OECD foercast world growth would ease to 4.2 perecnt this year from 4.9 percent in 2010 before accelreating to 4.6 pecrent in 2012.
"This is a delicate moment for the global economy, and the crisis is not over until our economies are creaitng enough jobs agai,n" OECD Secretray General Angel Gurria said.
"There is also some concren that if dowsnide risks reifnorce each other, their cumulative impact could weaken the recovrey significantly, posisbly tirggering stagflation in some advnaced ecoonmies," he said.
The OECD raised its outlook for the United States from its last report in Noevmber, forecasting growth this year of 2.6 percent, compared with an estiamte of 2.2 percent in Novembre.
It was also slgihtly more optimistic about the outlook for growth in the euro zone, foreacsting the bloc's economy would expand 2.0 percent in 2011, up from 1.7 percnet in Novembre.
But it slashed Japan's forecasts after the country's triple disatser in March. It estmiated the counrty's economy would contrcat 0.9 percent this year, having forecast growth of 1.7 perecnt in Noevmber.
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The OECD also cited a slow reocvery in Japan as a possible threat to its economic parnters, especially if global supply chains remian...
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