PARIS - The US and Japan are leading a fragile economic recovery among developed countries that could yet be blown off course if the euro zone fails to contain the damage from its problem debtor states, the Organisation for Economic Co-operation and Development (OECD) said on Tuesday.

In its twice-yearly economic outlook, the Paris-based organisation forecast that global growth would ease to 3,4% this year from 3,6% in 2011, before accelerating to 4,2% in 2013, in line with its last estimates from late November.

"The global economic outlook is still cloudy," OECD secretary-general Angel Gurria told reporters. "At first sight the prospects for the global economy are somewhat brighter than six months ago. At closer inspection, the global economic recovery is weak, considerable downside risks remain and sizeable imbalances remain to be addressed."

Growth across the organisation's 34 members, generally the wealthiest in the world, would ease this year to 1,6% from 1,8% in 2011 and then reach 2,2% in 2013, the OECD said, also roughly in line with previous estimates.

Mr Gurria said that public finances were "fragile", and in some cases "in dire straits", in OECD countries.

A perception that the burden of the economic crisis had not been fairly shared was fuelling a confidence crisis and European leaders should consider all possible measures to mend the bloc's debt problems.

"A bad-outcome scenario in the euro area with implications for the rest of the world cannot be ruled out," he said.

The OECD forecast that the 17-member euro-zone economy would shrink 0,1% this year before posting growth of 0,9% in 2013, though regional powerhouse Germany would chalk up growth of 1,2% in 2012 and 2% in 2013.

"We see a slow rebound of growth in the US driven mostly by private demand, some pick-up in Japan and moderate to strong growth in emerging economies," OECD chief economist Pier Carlo Padoan said in an interview.

"We also see flat growth in the euro area, which hides important differences, with northern countries growing and southern countries in recession," he added.

Although OECD economies were on the mend, the euro crisis could still spiral out of control with Greece struggling to remain solvent and Spanish banks needing to be recapitalised, Mr Padoan said.

The injection by the European Central Bank (ECB) of ?1-trillion of liquidity into the euro zone's banking system and an increase in European bail-out funds and International Monetary Fund reserves had helped keep the euro zone's debt crisis from spiralling out of control.

"If the situation gets worse, there are ways to enhance the firewall capacity, which could include a stronger intervention or role of the ECB," Mr Padoan said.

In particular, the ECB should not rule out buying government bonds again to keep borrowing costs down, lending to the European Stability Mechanism bail-out fund and cutting its benchmark interest rate, which stands at 1%. The ECB could also consider another injection of liquidity into the banking system.


In contrast to the euro zone, the US was expected to continue to benefit from easy credit conditions and ultra-loose monetary policy, with the world's biggest economy forecast to grow 2,4% this year and 2,6% in 2013.

In November, the OECD had forecast 2% for 2012 and 2,5% for 2013.

Although some budget tightening and a still weak housing market would be a drag on growth, private-sector demand would continue to strengthen as the unemployment rate eased to as low as 7,5% by the end of 2013 from 8,1% in April.

The OECD said that while the US needed to step up the pace of its fiscal tightening, if tax cuts were allowed to expire as scheduled in 2013 it could threaten growth.

Japan's economy was set to grow 2% this year and 1,5% in 2013 as a reconstruction boom after last year's earthquake and tsunami faded, although recovering world trade would offer support.

A rebound in global trade would be a bright spot for many economies, with the OECD forecasting a surge from 4,1% growth this year to 7% in 2013.

Export giant China was forecast to grow 8,2% this year and 9,3% in 2013 as interest rate cuts and increased social spending propped up domestic demand in the economy, which is not an OECD member.