World economy stable and ready for growth, says OECD

Another major international body has declared the world economy has stabilised, and seems set for growth.

The Paris-based Organisation for Economic Co-operation and Development said the 30 most advanced economies stopped contracting in the second quarter of the year.

The IMF's chief economist, Olivier Blanchard, was also bullish, saying: "The recovery has started. Sustaining it will require delicate rebalancing acts, both within and across countries", though there were some "deep scars" that would take years to heal.

And, while warning that the recovery has only arrived thanks to a "gusher of federal money" the legendary investor Warren Buffett agreed that "the United States economy is now out of the emergency room and appears to be on a slow path to recovery".

The OECD said that GDP in the organisation's area stabilised between April and June, with only the tiniest contraction - 0.002 per cent, a sum normally lost in rounding. Across the world's seven largest advanced economies, Japan now leads the way, with a 0.9 per cent GDP rebound.

Last week Eurostat said that France and Germany both grew by 0.3 per cent over the second quarter. Italy and the US, as well as smaller economies such as Spain and the Netherlands, are still in negative territory, though there is a widespread belief among economists that Britain and America will recover during this autumn. The G7 economies shrank by just 0.1 per cent.

However US Federal Reserve chairman Alan Greenspan has warned: "I think we're OK for the next six months.

"We are getting a recovery in [housing] starts and motor vehicles, but the process doesn't have legs to it."

- INDEPENDENT