Risks of an economic meltdown have receded, mainly due to improved prospects in the United States and Germany, but most of Europe is still vulnerable, the Organization for Economic Cooperation and Development (OECD) said Thursday, March 29 in Interim Economic Assessment for OECD countries, M&C reported citing DPA.

Membership of the Paris-based organization comprises the U.S., Canada, most of Europe, Japan, Korea, Australia, New Zealand and Chile. Thursday's report focused on the US, Canada, Japan, Britain and the three largest eurozone economies - Germany, France and Britain.

U.S. growth prediction were revised to 2.9 per cent in the first half of 2012, and to 2.8 per cent in the second, up from 1.7 per cent and 1.9 per cent respectively in November. For Germany, Padoan predicted 0.1-per-cent growth in the first half of the year, and 1.5 per cent in the second. Four months ago his organization had forecast a 0.6-per-cent expansion for the entire year. The French economy was projected to contract by 0.2 per cent in the first semester, and expand by 0.9 per cent in the second; the Italian to shrink by 1.6 per cent and 0.1 per cent over the same period. Britain's gross domestic product (GDP) should fall by 0.4 per cent in the first semester and pick up in the second, growing by 0.5 per cent.

Japan was expected to “rebound strongly” in the first half, with GDP expanding by 3.4 per cent. The growth rate was expected to slow to 1.4 per cent in the second semester, the OECD said. Recent spikes in oil prices will hurt the fledging recovery, the OECD warned. It predicted that they would add “one quarter of a percentage point to inflation” and shave 'between 0.1 and 0.2 per cent' off GDP growth across the entire OECD region.

Turning to Europe, Chief Economist Pier Carlo Padoan detected symptoms of a credit crunch, noting that “growth in lending in the euro area remains weak and has recently decelerated even further, despite recent (European Central Bank) interventions.” He repeated calls for an increase in the size of the currency bloc's firewalls - which eurozone finance ministers were set to discuss Friday - and quicker action to recapitalize weak banks. The OECD report also stressed the need for structural reforms across the European Union - both in so-called “deficit countries” such as Spain, Greece and Italy, and “surplus” ones like Germany. These are needed “to address fundamental imbalances” in the eurozone, and should concentrate on the EU's single market, product market regulation, tax codes and labour laws, Padoan suggested.