Emerging market economies China and India are poised to accelerate due to strong stimulus measures while Japan's recession has "bottomed out" and its economy will pick up, the OECD projected Thursday.
The forecasts come as many developed nations, which are only slowly emerging from recession, are looking to China and India to act as engines of global growth.
South Korea, meanwhile, is enjoying one of the strongest recoveries from the global slump in the 30-nation OECD area, led by exports, the organisation said.
"Vigorous growth has resumed in China" thanks to sizeable monetary and fiscal stimulus, said the Organisation for Economic Cooperation and Development in its twice-yearly Economic Outlook.
The Paris-based group hiked its growth forecast for China to 8.3 percent in 2009 and 10.2 percent in 2010. In March, it projected China's growth at six to seven percent in 2009.
China's government-backed spending spree will support rapid growth in the near future, but the pace will slacken when the sweeping stimulus measures are withdrawn and growth will slow to 9.3 percent in 2011, it said.
"Highly stimulatory economic policy will continue to support growth over the near term," said the OECD, which counts Japan and South Korea as members but not China or India.
For India, the OECD boosted its growth forecast to 6.1 percent in 2009 and 7.3 percent in 2010, rising to 7.6 percent the following year. The OECD, in March, projected 4.3 percent expansion for India in 2009.
"The Indian economy has weathered the global downturn relatively well," the OECD remarked.
India's recovery appeared to be only "modestly hampered" by the driest monsoon in nearly four decades and economic data suggested the growth "momentum is strengthening," the OECD said.
But a resurgence of inflationary pressures pose a "key challenge" to Indian policymakers in deciding when to withdraw fiscal and monetary stimulus in order to tackle the large public deficit, it said.
Indian policymakers have frequently noted the need to support a fledgling recovery in the country and avoid unwinding the stimulus too quickly.
In Japan, the world's second-largest economy, "the severe recession triggered by the global crisis has bottomed out," due partly to an export rebound, but risks of deflation will persist, the OECD said.
Japanese growth should pick up gradually to two percent in 2011, from 1.8 percent expansion in 2010 and a contraction of 5.3 percent in 2009, it said.
But Japan's central bank should keep interest rates extremely low to fight deflation "until underlying inflation is firmly positive," the OECD urged.
Japan's economy grew by an annual 4.8 percent in the third quarter, data earlier this week showed, the fastest clip in over two years.
South Korea's economy is estimated to grow 0.1 percent in 2009, accelerating to four to 4.5 percent in both 2010 and 2011.
Australia, less hurt by the financial crisis than most OECD countries, should enjoy a more robust recovery with growth of 0.8 percent this year, picking up to 2.4 percent in 2010 and 3.5 percent in 2011.
New Zealand is finally emerging from its long recession, thanks to strong domestic and global stimulus, the OECD said. Growth will contract in 2009 by 0.7 percent but expand next year by 1.5 percent and 2.7 percent in 2011.
Share This Article With Planet Earth
