LONDON, (AP) – The global economic recovery could be slower than previously anticipated but a return to recession is unlikely, a leading international economic body said Thursday.
In its latest economic assessment, the Paris-based Organization for Economic Cooperation and Development said the Group of Seven industrialized countries are set to grow by around 1.5 percent on an annualized basis in the second half of 2010.
Though that’s down from its previous prediction of 1.75 percent issued in May, the OECD reckons that the loss of momentum in the recovery is likely to prove “temporary,” though uncertainty has increased.
“It is unlikely that we are heading into another downturn,” said the OECD’s chief economist Pier Carlo Padoan.
While consumer spending is set to remain weak, the OECD says a combination of robust corporate profits and low business investment suggest that capital spending is unlikely to weaken further.
And because inventories are now close to desired levels, a renewed depletion of stocks is also unlikely, it added.
Based on the most recent data, the OECD said U.S. economic growth is expected to rise by an annualized 2.0 percent in the third quarter but then moderate to 1.2 percent in the fourth quarter.
In the second quarter, U.S. economic growth more than halved to a rate of 1.6 percent, triggering concerns that the world’s largest economy was heading for a so-called double-dip recession.
In Japan, the OECD sees growth rising to 0.7 percent in the fourth quarter from 0.6 percent in the third. Though fairly muted, that’s still an improvement on the 0.4 percent growth posted in the second quarter of the year.
Meanwhile, the OECD said it expects the combined economy of the three largest countries in the euro area — Germany, France and Italy — to grow at a rate of 0.4 percent in the third quarter and 0.6 percent in the fourth quarter. Though growing, those rates are way lower than the 5.1 percent growth recorded in the second quarter when Germany, in particular, saw its exports bounce massively as global trade picked up.