The Paris-based Organization of Economic Cooperation and Development has offered its most positive forecast in months on the world economy, saying 2010 is likely to usher in modest growth.

The Organization for Economic Cooperation and Development did not offer a particularly upbeat economic forecast either for this year or next.  Its new report predicts the economies of its 30-member states will shrink by 4.1 percent this year.

Trade likely to fall

OECD Secretary-General Angel Gurria told reporters that trade is likely to fall 16 percent, while 25 million more people will be out of work next year than was the case in 2007.  But Gurria said the worst may be over.

"The good news is that economic activity in the OECD countries is reaching bottom," he said. "But that is following the deepest decline since the Second World War, which means you stopped contracting at a very low level of economic activity." 

"In fact, this is the first economic outlook in two years that our projections are not more pessimistic.  We are revising up previous projects of OECD economic growth compared to [the] previous economic outlook," he added.

That includes a slightly more positive take on this year's economic contraction to only 4.1 percent, compared to a previous estimate of 4.3 percent.

Hopes for recovery

Gurria said improved financial markets and business activity are giving OECD economists hope for recovery.  The OECD projection covers about 80 percent of the world economy.  But the turnaround will be slow.  OECD economies will grow only about 0.7 percent on average next year.

And that growth will be uneven.  While China is already recovering from the downturn, recovery in the United States next year could be weak and offset by a 10 percent unemployment rate.  Overall, the US economy is expected to shrink by more than two percent this year, compared to a modest 1.1 percent growth in 2008.