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| OECD sees risk of 'stagflation' for global recovery | OECD sees risk of 'stagflation' for global recovery |
| (40 minutes later) | |
| The global economic recovery still faces many risks, which could lead to "stagflation", the OECD has said in its latest economic outlook. | The global economic recovery still faces many risks, which could lead to "stagflation", the OECD has said in its latest economic outlook. |
| World growth is forecast to be 4.2% this year, down from 4.9% last year, before rising to 4.6% in 2012. | World growth is forecast to be 4.2% this year, down from 4.9% last year, before rising to 4.6% in 2012. |
| But the OECD said rising prices of oil and other commodities, the damage from Japan's earthquake, and a sharp slowdown in China could derail things. | |
| In some countries this could lead to stagnant growth and high inflation. | In some countries this could lead to stagnant growth and high inflation. |
| Chief amongst the risks was a further rise in oil prices due to the political instability in the Middle East, said the Organisation for Economic Co-operation and Development (OECD) in its report. | |
| Given the continued fragility of government finances in many countries, the organisation warned that if any of these risks materialised, they could lead to further disruption in the financial markets. | |
| However, provided commodity prices do stabilise, the effect of recent price rises and of the devastating Japanese earthquake are expected to fade, with growth picking up by the second half of the year. | |
| Indeed, the OECD economists pointed to the possibility of strong pent-up demand for durable goods among Western consumers, and for capital equipment by firms, as a reason why growth may take off more rapidly than forecast. | |
| The OECD is an association of 34 developed countries, including the US, Japan and European countries, that sponsors economic reform and trade. |