Global economic growth to accelerate in H1 2013: OECD

Global economic activity is picking up, but the eurozone crisis is withholding a meaningful recovery, Organisation for Economic Cooperation and Development (OECD) said in its latest interim economic outlook presented in Paris on Thursday.

OECD's chief economist Pier Carlo Padoan said, ''The global economy weakened in late 2012 but the outlook is now improving for OECD  economies. Bold policy action remains necessary to ensure a more sustainable recovery, particularly in the euro area, where growth is uneven and remains slower than in other regions.''

The report says that the group of seven developed nations including the US, Japan, Germany, France, Italy, the UK and Canada are expected to register an annualised 2.4-per cent growth in the first quarter of 2013 and a 1.8-per cent growth in the second quarter.

The financial markets are out-pacing real activity, which has been held back by weak business and consumer confidence, and highlights the risk that asset prices may rise beyond levels justified by fundamentals.

Eurozone's largest economy, Germany, is expected to grow by 2.3 per cent in the first quarter and by  2.6 per cent in the second. France, the second-largest economy in the eurozone, is expected to see a 0.6 per cent contraction in the first quarter followed by a 0.5 per cent rebound in the second.

In Italy, real GDP is expected to contract by 1.6 per cent in the first quarter and by an additional 1 per cent in the second.

Unemployment rates across the eurozone are at their highest levels, reaching 11.9 per cent in January.

''The employment situation continues to deteriorate in many countries, making it all the more urgent to implement the labour and product market reforms that can stimulate growth and create jobs,'' Padoan said.

The US economy is forecast to grow at 3.5 per cent in the first quarter which will moderate to 2 per cent in the second quarter. Canada is likely to grow by 1.1 per cent in the first quarter and further increase to 1.9 per cent during the second.

Japan, the world's third-largest economy is projected to improve from last year's lower levels to a 3.2 per cent expansion in the first quarter and 2.2 per cent in the second.

The UK is expected to register a 0.5 per cent growth in the first quarter and 1.4 per cent in the second.

The OECD said that monetary stimulus remains necessary but needs vary across countries. While the US Federal Reserve is keeping policy rates low until the labour market stablilises, aggressive action is required in Japan to tame the deflation and achieve the central bank's 2-per cent inflation target.

''In the euro area, there is still some scope to ease monetary policy further, given weak demand and inflation well below the ECB's objective, while further action is needed to repair the transmission mechanism,'' Padoan said.