“Our forecast for the first half of 2012 points to robust growth in the United States and Canada, but much weaker activity in Europe, where the outlook remains fragile,” says Padoan. “We may have stepped back from the edge of the cliff, but there’s still no room for complacency,” he adds.
In the United States, the ongoing rebound in employment, stronger consumer confidence, higher equity prices and credit growth are underpinning the recovery, with growth projected at 2.9% in the first quarter and 2.8% in the second. Canada is projected to grow by 2.5% during each of the first two quarters
The optimistic view on North America contrasts with the much more fragile outlook in Europe, where weak consumer confidence, climbing unemployment and tight credit all point to further falls in activity.
The OECD projects that the euro area’s three largest economies—Germany, France and Italy—will shrink by 0.4% on average during the first quarter, before a moderate 0.9% growth recovery in the second quarter.
Seen individually, the German economy is expected to accelerate through the first half of the year, with growth of 0.1% in the first quarter and 1.5% in the second. The French outlook is more muted, with a -0.2 percent reduction in the first quarter followed by 0.9% growth in the second. In Italy, weak industrial production and household sentiment suggest recession for the first two quarters of the year, but the most recent indicators have been more positive, resulting in slightly better projected growth for the second quarter, the OECD says.
In the United Kingdom, the economy is expected to contract by 0.4% and grow by 0.5% in the second quarter.
Growth in Japan is projected to rebound strongly in the first quarter to 3.4%, before easing to 1.4% in the second quarter. A number of factors threaten the recovery, including rising oil prices, weakening activity in emerging market economies, notably China, and a slowdown in world trade growth that reflects weakening global demand. “Government action will continue to be critical, particularly in the euro area, where unfinished policy business on fiscal frameworks, financial firewalls and fundamental structural reforms must move ahead,” Padoan adds.