|OECD cuts China full-year growth forecast to 7.4pc
The OECD trimmed growth forecasts for China and the United States, warning that lasting recovery is still not firmly on its feet despite a rebound in some countries.
US growth in 2013 will be at 1.7 percent rather than 1.9 percent forecast in May, the OECD said.
Growth in China was forecast at 7.4 percent compared with 7.8 percent predicted earlier.
A central risk to sustainable recovery is how the US Federal Reserve bank winds down stimulus, the OECD said.
“It is necessary to continue to support demand, including through unconventional monetary policies, in order to minimize the risk of the recovery being derailed,'' it said in its Interim Economic Assessment.
The OECD endorsed the Federal Reserve's plans to begin gradually reducing its the monetary stimulus it injects into the US economy from US$85 billion per month.
It said Japan should keep up its stimulus efforts until deflation ends, while the euro zone should be ready to undertake further monetary easing if the recovery fails to take hold.
The OECD said the European Central Bank may need to undertake measures to boost sluggish lending such as ``providing direct incentives to banks to extend credit to the real economy.''
Despite subdued inflationary pressures in China, the OECD recommended caution over monetary easing if growth slows due to the fast increase in lending.--Agencies