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OECD says global economy near the bottom, but -

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The Organisation for Economic Co-operation and Development says it believes the worst of the global
recession is over, and a recovery may not be far away. But that's at odds with a World Bank report
which has found the global recession could yet be worse than predicted.

PETER CAVE: Who does one believe when it comes to economic forecasts?

The OECD says the global economy may be near the bottom and that a recovery may not be far away.

This comes just days after the World Bank gloomily forecast global recession may be worse than
expected.

Finance reporter Sue Lannin.

SUE LANNIN: The Organisation for Economic Co-operation and Development thinks the global slowdown
is near the bottom and the corner may have been turned.

Acting chief economist Jorgen Elmeskov told the BBC that its measures of economic growth are better
than the World Bank's which thinks the global recession could get worse before it gets better.

JORGEN ELMESKOV: The one that we use which is in technical terms based on purchasing (inaudible) is
generally seen to be the one that is most advisable to use. But obviously that can be a little
difficult to use for some of the less developed countries.

SUE LANNIN: Senior international economist at Westpac Huw McKay thinks the World Bank's forecasts
are more accurate.

HUW MCKAY: In this situation actually probably back the World Bank, in the sense that they have a
much broader measure of global growth that they're actually looking it.

Now the OECD essentially represents the high income economies and their measure of world GDP is the
high income countries plus the largest of the emerging countries. That includes China and India and
they're doing relatively better than some of the smaller emerging markets which are really
struggling.

So the World Bank is measuring something slightly different but they're also reflecting it quite
accurately due to this decline in foreign capital.

SUE LANNIN: The OECD predictions for output in the developed world are grim. Growth is expected to
fall by more than 4 per cent this year and the number of people out of work is expected to jump
next year to almost 60-million people.

The OECD sees a global recovery next year, although it warns it will be weak and fragile.

Jorgen Elmeskov again.

JORGEN ELMESKOV: We see uncertainties on both sides of the projection whereas the previous sets of
projects, they have mainly had uncertainties on the downside. I think this time around we would say
that things could actually also go better than we say.

SUE LANNIN: The OECD says stimulus packages by governments around the world have helped. Still Huw
McKay says the situation is looking bleak.

HUW MCKAY: That number is substantially contributed to by declines in the United States but really
most importantly the non-US G3 economies, i.e. Germany and Japan, are both expected to contract by
more than 6 per cent this year. That is an enormously weak starting point for assessing regional
growth.

Germany and Japan are both being really hurt by the decline in global demand for manufactured goods
and it's really hard to see how they're going to do better than those minus 6 per cent growth
rates.

SUE LANNIN: There's a better report card for Australia. The OECD and the International Monetary
Fund both say the local economy will shrink by 0.5 cent in 2009, better than the Budget forecasts
of 1 per cent.

They see economic growth growing next year by between 1.25 and 1.5 per cent.

Treasurer Wayne Swan is pleased.

WAYNE SWAN: The Australian economy is the strongest performing economy of all major advanced
economies with lower borrowings and lower deficits of all of those major advanced economies.

What both reports also show is just how effective our economic stimulus has been in cushioning the
Australian economy from the most savage effects of this global recession. In effect there's a big
tick for the economic stimulus package, particularly in the IMF report.

SUE LANNIN: But they've both warned that more stimulus measures may be needed.

JP Morgan chief economist Stephen Walters.

STEPHEN WALTERS: We think employment will fall. That has not happened yet so what you'll see is
unemployment going up quite sharply.

And that is typically the pattern you see in recession is that in the early stages of the downturn
you get unemployment just drifting up but eventually firms can't trim their labour costs any more
by fiddling around with shifts and working hours and overtime and sending people on holidays.
Ultimately they need to cut jobs.

PETER CAVE: JP Morgan chief economist Stephen Walters ending that report by Sue Lannin.