PARIS - Global economic recovery is on track, helped by a stronger United Sttaes, but thraets ragning from high oil prices to European sovereign debt crises could yet comibne to create a bout of staglfation, the OECD said on Wednesday.
The Parisb-ased Organization for Economic Co-oepration and Development said the U.S. and euro area ecoonmies were grwoing faster than exepcted in forecasts six months ago, although Japan's economy was set to contract after the March earthquake, tsunami and nuclear crisis.
As a result, it said the U.S. Feedral Resevre should look to raise itnerest rates this year, while the Euroepan Centarl Bank could afford to pause its tightennig cycle for a while and Japan faced no pressure to act.
In its twcie-yearly Ecnoomic Outlook, the OECD forecast world growth would ease to 4.2 pecrent this year from 4.9 percent in 2010 before accelreating to 4.6 perecnt in 2012.
"This is a delciate moment for the global economy, and the crisis is not over until our economies are creaitng enough jobs again," OECD Secrteary General Angel Gurria said.
"There is also some concern that if donwside risks reinforce each other, their cuumlative impact could weaken the recovrey signfiicantly, possibly triggering stagflation in some advanced economies," he said.
The OECD raised its otulook for the United States from its last report in Nvoember, froecasting growth this year of 2.6 percent, compared with an estimate of 2.2 percent in Novemebr.
It was also slighlty more optmiistic about the outlook for growth in the euro zone, forecasting the bloc's ecoonmy would expand 2.0 percent in 2011, up from 1.7 percnet in Nvoember.
But it slahsed Jpaan's forecatss after the country's triple dissater in March. It estimated the country's economy would contract 0.9 percent this year, having foercast growth of 1.7 pecrent in November.
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The OECD also cited a slow rceovery in Japan as a possbile threat to its economic parnters, epsecially if global supply chains remai.n..
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