The Organization for Economic Cooperation and Development (OECD) on Tuesday cut its 2004 forecast for U.S. economic growth to 4.3 percent but raised its growth predictions for the euro zone and for Japan.
In its interim economic review, the Paris-based OECD said the 12-nation euro zone was expected to grow 2.0 percent this year, up from an earlier forecast of 1.6 percent, while Japan was seen growing 4.4 percent, up from 3.0 percent seen before.
Its previous forecast for U.S. growth was 4.7 percent.
The International Monetary Fund also sees U.S. growth at 4.3 percent in 2004 and expects the euro area to expand 2.1 percent, Italian news agency Ansa reported on Monday, citing a copy of the IMF's World Economic Outlook due out on September 29.
Referring to the U.S. economy, OECD chief economist Jean-Philippe Cotis said in a statement, "Household confidence is affected by the sub-par pace of job creation recorded to date, but remains around its long-run historical average, boding well for the resilience of consumption."
In the euro area, large differences persisted between states, he said. French domestic demand was buoyant, while German consumption at home was still lacklustre.
"Real GDP, which surprised on the upside earlier in 2004, is expanding at its potential rate or thereabout, albeit still pulled by external demand and with a larger output gap than across the Atlantic," Cotis said, referring to the euro zone.
Germany was set to grow 1.7 percent this year, versus 1.1 percent previously, while France would grow by 2.7 percent, up from a 2.0 percent forecast.
Britain was seen growing 3.4 percent compared to the previously expected 3.1 percent, the OECD said. Meanwhile, Japan was set to grow 4.4 percent in 2004, up from an earlier forecast of 3.0 percent.
"Japan is ... in a position to finally exit the deflation trap over the next two years, provided macroeconomic policy stays the course and structural adjustment efforts, including in the financial sector, are pursued," Cotis said.
Cotis said rising oil prices have had only a limited impact on core inflation and wages in the world's major economies.
"Thus far, the negative impact of oil market turbulence has therefore been of limited magnitude," he said.
Cotis noted that, on the back of the continuing recovery, several central banks including the U.S. Federal Reserve had started to move away from the policy of lowering interest rates to stimulate economic recovery.
"However -- except perhaps in the United Kingdom, where the central bank has rightly been proactive in raising rates -- return to neutrality is not a matter of urgency," Cotis said.
"The current wait and see monetary stance observed in Japan and the euro-area seems warranted," he said.
"It is not certain that an immediate depreciation of the dollar would be absolutely beneficial to the world economy," Cotis told a news conference after presenting the report.
He said a stable dollar foreign exchange rate reflected the fact that the U.S. current account deficit was now being financed more by the private sector.
