It is a sign of things getting better when the OECD today announced positive revisions to their March growth forecasts. Instead of a 4.3% contraction this year for its members, the organization now believes it is at a lower rate of 4.1% while the growth next year moves up from 0.1% to 0.7%. This positive however does not mean positive for everyone. The OECD expressed a better outlook for the US but still remained concerned about the Euro area who might see a faster contraction than expected.
From the WSJ:
So while the OECD expects the U.S. economy to contract by 2.8% this year and expand by 0.9% in 2010, it expects the euro-zone economy to shrink by 4.8% this year and stagnate in 2010.
Reports also mentioned the direction where developing countries are headed, particularly China. While much more hopeful for the Chinese economy, revising its forecasts from 6.3% to 7.7% this year and from 8.5% to 9.3% in 2010, it was a bit different for Russia. While growth for next year has improved several times from 0.7% to 3.7%, their economy is expected to contract more sharply this year than OECD’s prediction from March.
The organization was also quick to point out that governments should not be in a hurry to reduce the piles of debt they have incurred funding their stimulus programs, but it recommends a medium-term plan for the debt reduction. Similarly, they believe interest rates should stay at its current level of 0 until 2011.