Are world economies rebounding?

World economy

In 2010, the Organisation for Economies Co-operation and Development (OECD) believes growth and recovery will happen in all world regions.

For its 30 member countries, rich nations including the US and UK, it has more than doubled its growth forecast to 1.9 percent for next year, from 0.7 percent, the BBC report.

Despite this forecast, the OECD has warned the developed nations not to expect a smooth ride.

It said growth was being "held back by still substantial headwinds" and would be "modest" for some time.

"The great challenge ... is to move from a policy-based recovery to self-sustained growth and there are a number of risks that could complicate that transition," warned OECD Secretary General Angel Gurria, addressing a press conference in Tokyo.

After being among the most sluggish economies in the euro zone for well over a decade, in 2010 Italy is seen slightly outperforming the average of the 16-nation bloc, which is expected to post GDP growth of 0.9 percent.

Italy's debt burden, the heaviest in the euro zone, is seen rising by nearly 10 percentage points to around 115 percent of GDP by the end of this year and around 120 percent by 2011.

Rich nations growth forecasts from the OECD:

US: 2009 -2.5%, 2010 2.5%
Japan: 2009 -5.3%, 2010 1.8%
Germany: 2009 -4.9%, 2010 1.4%
UK: 2009 -4.7%, 2010 1.2%

Forecasts for non-OECD members:

China: 2009 8.3%, 2010 10.2%
India: 2009 6.1%, 2010 7.3%
Russia: 2009 -8.7%, 2010 4.9%
Brazil: 2009 0.0%, 2010 4.8%

Risks

The OECD said that the very measures that are helping richer nations to recover pose risks to that recovery.

The UK, for example, needed to come up with a concrete plan to ease concerns about the stability of the public finances, it added.

The OECD said the effectiveness of the UK's asset purchase programme - the so-called quantitative easing programme - was uncertain.

Unemployment

Unemployment is currently one of the major factors during the recession. According to OECD's economic outlook, this is set to stay a danger.

In the US, people are expected to continue to lose their jobs at a faster rate than new ones are created until sometime in the first part of next year.

The picture looks even worse for those in the European Union, as unemployment may continue to rise in that region until 2011.

Recovery

The one member nation whose economy should perform vigorously in 2010 is South Korea. It should rebound to grow by 4.5 percent in both 2010 and 2011, after ending this year with almost no growth.

According to the OECD: "The Indian economy has weathered the global downturn relatively well."

Although poor monsoon rainfall will "modestly hamper" India's recovery, economic growth is projected to reach over 7 percent in 2010 and 7.5 percent in 2011, The Economic Times reports.

Overall, "unprecedented policy efforts appear to have succeeded in limiting the severity of the downturn and fostering a recovery to a degree that was largely unexpected even six months ago," the report concluded and AFP reported.

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