US, Japan recover as eurozone lags

PARIS - Agence France-Presse

The United States and Japan drive recovery in Group of Seven (G7) country, as eurozone members lag , an OECD report says. AP photo

The world’s biggest economies are slowly recovering from a late 2012 slowdown, the OECD said in a near-term of assessment of G7 nations yesterday, with Japan and the United States leading the way, ahead of a struggling, two-speed eurozone.

Emerging economies were tipped to remain by far the strongest growth performers with China expected to expand by well more than 8 percent in the first half of 2013, the Organization for Economic Development and Cooperation said.

The OECD forecast that the full Group of Seven (G7) most industrialised economies, which includes US, UK, France, Germany, Italy, Canada and Japan, will grow by 2.4 percent in the first quarter of this year on an annualised basis and by 1.8 percent in the second. Forecasts remain very uncertain however, the OECD added, with new-found buoyancy on financial markets yet to feed through to the wider economy.

The United States, the world’s biggest economy, was seen leading the pack with growth estimated to reach 3.5 percent in the first quarter, slowing to 2 percent in the following three months.

New measures to boost the Japanese economy would help it grow 3.2 percent in the first quarter and 2.2 percent in the second quarter.

The Paris-based organisation said that although downside risks to growth were eased last year after the US took action to face its fiscal cliff debacle and the European Central Bank (ECB) pledged support for troubled eurozone economies, “real activity has yet to reflect fully the improvement”. “This highlights the risk of asset prices getting out of line with fundamentals, especially as regards to corporate securities,” the report said.

The eurozone economy is experiencing a divergence, the OECD said, with Germany “likely to pick up strongly over the first two quarters of 2013” and the economies of other member nations such as France and Italy remaining “slow or negative.”