OECD Predicts Modest U.S. Growth Next Year

Paris, France, Nov.19, 2009--The U.S, and other developed economies will grow faster next year, but recovery will remain modest, with the U.S. and Japan outpacing Europe, according to the Organization for Economic Cooperation and Development

The OECD more than doubled its estimate for 2010 growth in its 30 member countries -- which include the U.S., Japan, Germany and the United Kingdom -- to 1.9 percent.

Still, the recovery is expected to remain fragile.

"In most OECD economies, growth is likely to fluctuate around a modest underlying rate for some time to come," said the organization's top economist, Jorgen Elmeskov, in an editorial.

"It is being held back by still substantial headwinds. It is only some time down the line that the recovery will become sufficiently strong to begin to reduce unemployment."

The OECD also reduced the expected contraction this year to 3.5 percent from an earlier forecast of 4.1 percent. The organization publishes its economic outlook twice a year, although it updated some 2009 forecasts in an interim assessment published in September.

It predicts the U.S. economy will expand at a rate of 2.5 percent in 2010, up from a June forecast of 0.9 percent. It also expects a smaller contraction this year: a 2.5 percent fall in output compared with an interim September forecast of a 2.8 percent drop.

In Europe, the economies of the 16 countries sharing the euro are now expected to grow by 0.9 percent next year compared to a June forecast of zero growth. However, the OECD predicts a greater contraction of 4 percent this year, more than the 3.9 percent it calculated in September.

Unemployment is not set to peak before the end of 2010 or the beginning of 2011, and is likely to sap the strength of recovery, the OECD said.