OECD Sees 'Strong, Sustainable' Recovery Powered By U.S., Japan, China

By Agence France-Presse Industrialized countries are well into a robust and sustainable economic recovery, powered by the United States, China and Japan, but the rebound is bypassing the eurozone and could be undone by surging oil prices, the Organization for Economic Cooperation and Development (OECD) said May 11. The OECD, in its twice-yearly economic outlook, raised its growth projection for the world's 30 leading industrial nations to 3.4% this year and 3.3% in 2005. Last November it foresaw an expansion of 3% in 2004 and 3.1% next year. In its latest study it predicted a near double-digit growth in world trade this year and next and said that inflation in the OECD area would ease further to about 1.5%, the lowest level for more than 30 years. The OECD said eurozone consumer confidence remained weak, prompting high levels of precautionary savings and depressing demand. As a result, there was now a good case for the European Central Bank to ease borrowing costs in the zone, where the benchmark interest rate has been stuck at 2% since June 2003 despite a rising euro and tame inflation. Also clouding the global horizon are higher oil, metal, ore, mineral and agricultural raw materials prices, reflecting blockbuster demand in China and the United States, as well as output restrictions imposed by the Organization of Petroleum Exporting Countries. "A significant further increase [in oil prices] could restrain or postpone recoveries," the OECD maintained, citing the possibility of exacerbating inflation pressures. Copyright Agence France-Presse, 2004