The recovery from the global economic crisis continues, but it's no time to get complacent, says the Organization for Economic Cooperation and Development.
The Paris-based think tank reported Tuesday in its interim economic assessment that the global recovery is gaining traction in many major advanced economies, but some emerging markets continue to flounder.
The OECD singled out North America, Japan and the United Kingdom as three areas that are showing promising growth forecasts. The organization forecasts that the U.S. economy will grow at an annualized rate of 2.5 percent in the third quarter, the same rate that the Commerce Department has measured for the second quarter. Japan is slated to fare even better, at 2.6 percent, and the U.K. will grow at 3.7 percent. The group also points to the fact that Europe has moved out of a recession as a promising sign, with France and the U.K. posting improved annual forecasts since the organization's last assessment.
However, the OECD warned that the recovery remains fragile.
"The gradual pick-up in momentum in the advanced economies is encouraging but a sustainable recovery is not yet firmly established," said OECD Deputy Chief Economist Jorgen Elmeskov in a release accompanying the latest figures.
Elmeskov added that "major risks remain," pointing to problems that have plagued advanced economies for years now, like continued sovereign debt worries in Europe and the potential for more market-rattling fiscal fights in the U.S.
Still other major risks come from large emerging economies. While China continues to post the booming growth of a quickly developing economy, with a third-quarter GDP growth rate forecast at 7.2 percent, not all emerging economies are so fortunate. Growth in the BRIICS countries - a group that includes Brazil, Russia, Indonesia, India, China, and South Africa - has declined significantly in recent years, the OECD reported.
"The incoming indicators for emerging economies beyond China...have generally not been terribly good," Elmeskov said at a press conference Tuesday.
Though South Africa and Indonesia may not register in many people's minds as economic powerhouses, the report stresses that these types of economies are vital to global growth.
"As emerging economies contributed the bulk of global economic growth in recent years, and since their share of global output has increased so much, this widespread loss of momentum makes for sluggish near-term growth prospects for the world economy," the report says.
Uncertainty caused by central banks' stimulus policies in advanced economies are among the factors tripping up emerging-economy growth, says the report. The coming winding-down of the United States Federal Reserve's latest round of quantitative easing, for example, has rattled markets for months. The potential for change in monetary policy also has led to currency depreciation in emerging economies. While that can be good for exporting, it also can be bad for citizens' purchasing power.
Despite the problems that dialing back stimulus might cause, Elmeskov said Tuesday that "for the U.S., we think tapering of the incremental QE should begin now." However, the OECD advocated low interest rates in the U.S. and continued easy money policies in Japan and the euro area.
The U.S. may announce that it will start tapering its current $85 billion monthly bond purchases as soon as September 18, when the Federal Reserve's Open Market Committee will conclude its next meeting.