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OECD warns of slow recovery

The OECD believes the world economy is near the bottom of the recession but has warned that any recovery is likely to be “weak and fragile”.

OECD’s latest “Economic Outlook” is the first in two years to see projections revised to upward economic growth, but it also points to areas of Europe that have yet to see clear signs of recovery.

In the 2009 Budget, Chancellor Alistair Darling predicted the UK economy would decrease by 3.5 per cent in 2009 and that the GDP would rise to 1.25 per cent in 2010.

However, OECD’s report says the GDP is expected to decline 4.8 per cent this year and have no growth in 2010 for many European countries.

Previously, the OECD projected a 4.1 per cent decrease in 2009 and a 0.3 per cent decrease in 2010, citing problems such as the housing market, a decline in exports and damaged financial sectors for the slow economic recovery.

OECD secretary-general, Angel Gurría says: “Thanks to firm action to stimulate our economies it appears that we have escaped the worst during this crisis. But the next few months will be equally testing. There needs to be a clear and credible plan and timeline for phasing out the emergency measures as the recovery takes hold. It is critical to consider these exit strategies now in order to prevent new risks in the years ahead.”

The OECD says governments will need to act swiftly in implementing announced stimulus measures because of the weakness in expected economic recovery.

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