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Global economy slowing but recession unlikely says OECD

General Motors workers in the US US economic growth will outpace European

growth in the second half of the year, the OECD says

The global economic recovery is slowing faster than forecast, but a return to

recession is unlikely, a leading global economic group has said.

The Organisation for Economic Co-operation and Development (OECD) said the

slowdown had been more "pronounced than anticipated".

As a result, it lowered its growth forecast for 2010 for the G7 leading

economies to 1.5%, down from 1.75%.

It added the economic outlook was characterised by "great uncertainty".

"The uncertainty is caused by a combination of factors, but it is unlikely that

we are heading into another downturn," said the OECD's chief economist Pier

Carlo Padoan.

US growth

The group said consumer spending could remain weak, while concerns about high

levels of government debt were also serving to constrain growth.

Against this, the group reported more stable financial conditions and strong

corporate profits.

It forecast growth in the US at an annualised rate of 2% between August and

October, then 1.2% in the final three months of the year.

In the second quarter of this year, the US economy grew at an annualised pace

of 1.6%.

The group also forecast a sharp slowdown in some leading European economies,

with Germany, France and Italy together growing at an annualised rate of 0.4%

in the third quarter and 0.6% in the fourth.

This would represent a sharp turnaround from the second quarter, when some

leading European economies grew at a faster pace than the US.

The UK, however, is set for stronger growth than the US, according to OECD

forecasts. Its economy could grow by 2.7% between August and October, and by

1.5% in the final quarter, the group said.

Growth forecasts: Third, fourth quarter

Source: OECD