The Organization for Economic Cooperation and Development, OECD, says economic growth in developed countries remains weak, but should improve in 2004. The Paris-based organization, in its semi-annual forecast, says the United States should lead the way to economic recovery.
The OECD says the quick end to war in Iraq has removed some political uncertainty. But the organization says underlying problems with the world economy continue, and it predicts that short-term growth will be weak and hesitant.
The organization expects the U.S. economy to outperform Europe and Asia, and forecasts growth of about 2.5 percent this year, and four percent in 2004.
The OECD forecast, its Economic Outlook, says the United States has benefited from low interest rates, a strong housing market and heavy consumer spending, and that its economy should pick up as investment increases.
But unemployment is not expected to fall in the United States, and it will remain at near record levels in Japan and parts of Europe.
In Europe, the organization foresees very little growth this year, and only 2.5 percent next year. In Japan, which has been in and out of recession for the past decade, recent growth is not expected to continue.
The OECD says it expects inflation to fall in Europe and rise in the United States, because the dollar has lost value against the euro. Japan's deflation is expected to continue.
Growth in some non-OECD countries, such as China, is predicted to exceed that of the member countries. But the organization warns that the crisis caused by the outbreak of Severe Acute Respiratory Syndrome, the disease known as SARS, around the globe may disrupt economies in Asia and elsewhere.