The global recovery is becoming broader-based and more self-propelled, the OECD says, but the risks are mostly on the negative side.
In its latest Economic Outlook it forecasts world gross domestic product growth of 4.2 per cent this year, rising to 4.6 per cent next year.
World trade is back above its pre-crisis peak and expected to gather pace, from growth of 8.1 per cent this year to 8.6 per cent next year.
"Most risks are on the downside, however, including further increases in oil and other commodity prices which could feed into core inflation, a deeper slowdown in China, an unsettled fiscal situation in the United States and Japan, and renewed weakness in housing markets," OECD chief economist Pier Carlo Padoan said.
The weaker peripheral members of the euro zone are not out of the financial woods yet, either. "A concern is that if downside risks interact, their cumulative impact could weaken the recovery significantly, possibly triggering stagflationary developments in some advanced economies."
The OECD forecasts New Zealand's GDP to grow just 0.6 per cent this year but 4.1 per cent next year as the rebuilding of Christchurch gets under way.
But it notes large uncertainties around those forecasts. "Renewed carry trade may push up the value of the currency, the large external debt position carries risks in a still volatile global financial market, persistently high house prices are vulnerable to correction and reconstruction may experience delays."
It estimates the country's potential (or sustainable non-inflationary) growth rate to be just over 2 per cent a year for the next 15 years, driven more by productivity growth than employment growth.
Among advanced economies generally it worries about high unemployment becoming entrenched especially as governments wrestle with unsustainable levels of public debt. It worries, too, about the risk of a substantial rise in oil prices if the political instability in the Middle East and North Africa spreads.
That would magnify the adverse effects on incomes and demand of the oil price rise which has already occurred, as well as increasing the upward pressure on inflation. Another risk is that the adverse consequences of the disaster in Japan could prove greater or more prolonged than expected.
Yet another is that the tightening under way in China as it confronts inflationary pressures will lead to a harder landing than the easing to 9 per cent growth in the OECD's central forecasts।
By Brian Fallow
www.nzherald.co.nz
Ireland, whose economy has been among the worst hit by the global financial crisis, yesterday threw its support behind French Finance Minister Christine Lagarde to become the next director of the International Monetary Fund.
The move comes as something of a surprise, given French-Irish tensions over the terms of Ireland's EU-IMF bailout.
Ireland's support adds to the growing European momentum for Lagarde to succeed her countryman Dominique Strauss-Kahn, who quit last week after he was accused of attempting to rape a New York hotel maid.
Lagarde called a Paris press conference for today, amid increasing speculation that she will formally announce her candidacy.
However, the representatives of major developing nations on the IMF's board issued a joint statement yesterday urging the lending agency to abandon the practice of always choosing a European to head the IMF.
The decision on the next IMF leader will be made by the 24-member executive board, whose officials represent the 187 IMF member countries.
The executive directors representing Brazil, China, India, Russia and South Africa said they wanted to see the election of the next IMF chief be "truly transparent" and merit-based.
"This requires abandoning the obsolete unwritten practice of convention that requires that the head of the IMF be necessarily from Europe," the five executive directors from developing nations said. In the IMF's history, it has always been headed by a European while an American has always been head of the World Bank.
"We feel it is outrageous to have the post reserved for a European," said Nogueira Batista, IMF executive director from Brazil and one signatory of the joint statement. "We want it to be a truly open process, not just in words, but in reality."
Batista said his country and the other nations who joined in the statement have not picked a candidate yet. He said they will be watching to see the candidates emerge during the nomination process over the next three weeks.
The top three candidates in terms of the support they receive from the IMF board will go into a final round of interviews with the IMF board. The IMF has said it hopes to have the job filled by the end of June.
"We hope to have a managing director selected who is the best person for the job irrespective of nationality," Batista said.
Licinda Creighton, Ireland's minister for European affairs, said she believed that Lagarde would be an "excellent candidate, she's eminently qualified, and if she's nominated we're likely to support her."
Ireland's influence on the choice of the next IMF chief is limited, but European heavyweights including Germany and Britain have already backed Lagarde, making her the European frontrunner for a job she has yet to declare any interest in.
French government spokesman Francois Baroin said China is "favourable" to Lagarde's candidacy to run the IMF, which provides billions in loans to stabilise the world economy.
China's endorsement would provide a big boost to Lagarde. However China's IMF executive director signed the joint statement issued by major developing countries.
The head of the Organisation for Economic Cooperation and Development, Angel Gurria, said choosing a woman to lead the Washington-based fund would benefit diversity.
"That certainly is welcome," he said. The IMF has never had a woman managing director.
"Madame Lagarde herself would be the first one to say it is not a question of simply because you are a woman," Gurria said. "But if it's a formidable woman like she is, well of course then you're talking business."
Gurria, a former Mexican finance minister whose name has also been mentioned in connection with the post, played down suggestions he might run if nominated.
"When you're talking about merit, it's difficult to find somebody with more merit [than Lagarde]," he said। "The Europeans have clearly picked their best and the brightest."
www.nzherald.co.nz
UK Government, in the wake of protecting interests of taxpayers has permitted to provide ‘conditional support’ to the JLR (Jaguar and Land Rover) being controlled by Tatas.
The official spokesperson at UK’s department of BERR (Business, Enterprise and Regulatory Reform) said that though provisions for helping the company exist, there are conditions to be fulfilled as interests of taxpayers needs to be protected.
Spokesperson from Tata though did ओot deny the talks being taking place but declined to disclose any information on the issue.
Tata group chairman Ratan Tata, while interacting with UL media said that UK government does not seem to care about manufacturing sector.
BERR also suspended reports, which hinted at the government’s reluctance to give loan guarantees to the brands because they were being controlled by a foreign company, an Indian in the present case.
