O.E.C.D. Says Growth in Developed Countries to Accelerate

PARIS — Economic growth among developed nations is likely to accelerate in the first half of this year as strength in the United States and Japan help to compensate for the continuing malaise in Europe, the Organization for Economic Cooperation and Development said Thursday.

“The global economy weakened in late 2012 but the outlook is now improving for O.E.C.D. economies,” the organization’s chief economist, Pier Carlo Padoan, said in the report.

The Group of 7 industrialized nations alone will grow at an annualized 2.4 percent in the first quarter and 1.8 percent in the second, the report estimated. G-7 nations shrank by 0.5 percent overall in the fourth quarter of 2012.

Mr. Padoan said “bold policy action,” particularly from the monetary authorities, was still needed to ensure growth, particularly in Europe.

The O.E.C.D., which is based in Paris, forecast that the U.S. economy would rebound in the first quarter to grow 3.5 percent on an annualized basis from the last three months of 2012, when growth was just 0.1 percent. The U.S. economy also appears to be on track for second-quarter growth of around 2.0 percent, the report said.

Japan, which under its new prime minister, Shinzo Abe, has committed to attacking deflation with all the resources at its disposal, will rebound to 3.2 percent growth in the first quarter of 2013 and 2.2 percent in the second quarter, the organization said. Japan’s economy grew just 0.2 percent in the October-December period.

But for Europe, hobbled by the seemingly endless euro crisis and budget-balancing measures, as well as joblessness and weak demand, “a meaningful recovery is likely to take somewhat longer,” the organization said. It predicted there would be a decided divergence between the economy of Germany, which is forecast to rebound strongly in the first half, and the rest of the region, which “will remain slow or negative.”

It predicted that Germany would post first-quarter growth of 2.3 percent, accelerating to 2.6 percent growth in the second quarter. The German economy shrank 2.3 percent in the last three months of 2012.

France, the second-largest euro zone member after Germany, will probably remain moribund, the report said, shrinking by about 0.6 percent in the first quarter before eking out 0.5 percent growth in the April-June period. The French economy shrank 1.2 percent in the fourth quarter.

Britain will manage first-quarter growth of 0.5 percent and 1.4 percent in the second quarter, after slipping 1.2 percent in the fourth quarter of last year, the report said.

The organization said growth from developing nations would continue to outpace the advanced economies, with China alone expected to simmer along at a level “well above 8 percent” in the first six months of the year.

Noting the still-fragile state of confidence and widespread unemployment, “bold policy action to support activity remains necessary in all major O.E.C.D. economies,” Mr. Padoan said. Given tight government finances, monetary policy remains a key instrument for supporting demand,” adding, “even though monetary stimulus may not always be sufficient and carries its own risks.”

Jacques Cailloux, chief European economist at Nomura in London, said that the O.E.C.D.’s overall forecasts appeared to be “considerably” more optimistic than most private forecasters were expecting.

“For the U.S., Japan and Germany the first half looks to be very strong,” he said.

Mr. Cailloux also said he expected the 17-nation euro zone economy to decline about 0.8 percent in 2013 from a year earlier, and that – so far, anyway – the boiling crisis in Cyprus had not led him to downgrade that already dismal view.

“Our forecast assumed some pretty large shocks and uncertainty,” he said. “Obviously Cyprus is a shock, it’s greater than we expected, but so far it hasn’t affected our broader outlook.”

Article source: http://www.nytimes.com/2013/03/29/business/global/oecd-says-growth-in-developed-countries-to-accelerate.html?partner=rss&emc=rss