Report: Future Optimistic For Nations' Economies

November 19, 2009 2:26 p.m. EST

Paris, France (AHN) - In a cautiously worded report, the Organization for Economic Cooperation and Development appeared increasingly optimistic Thursday that national economies are recovering from the worldwide financial breakdown.

Economies of the group's 30 member will expand 1.9 percent next year and 2.5 percent in 2011, according to OECD projections. In June, OECD forecast 2010 growth of 0.7 percent.

The U.S. economy will grow 2.5 percent next year, a dramatic upgrade from the 0.9 percent forecast by OECD at mid-year. The euro zone region will move away from the earlier projection of stagnation to 0.9 percent growth. Japan's economy will grow 1.8 percent rather than the earlier 0.7 percent forecast.

The most growth will come from China, where the economy is expected to expand 10.2 percent, according to OECD.

Forecasts for 2011 were equally optimistic. Growth in the U.S. will be 2.8 percent, the euro area 1.7 percent, Japan 2 percent and China 9.3 percent.

Before that growth, however, the OECD said economic contraction would continue. For 2009, the U.S. economy will shrink 3.5 percent, while the euro zone's and Japan's would contract 5.3 percent.

The future is not without its dangers, the OECD said. The organization warned that gross debt among its member nations could exceed their total gross domestic product by 2011. The job picture would continue to be glum. Unemployment was expected to rise from 8.2 percent this year to 9 percent in 2010 before falling to 8.8 percent in 2011.

The OECD said its projections could be wrong if consumers chose to pay down debt and increase savings rather than spend on new purchases or if businesses invested more aggressively than expected.

"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," said Jorgen Elmeskov, OECD's acting head of the economics department, in a statement accompanying the report. "Radical policy action will be required in the years to come to restore sound macroeconomic balance, healthy growth and low unemployment. Only when that has happened will the crisis have been fully overcome."