Contraction in world economic output appears to be slowing and a recovery could begin at the end of this year, Organization for Economic Development and Cooperation (OECD) chief Angel Gurria said Friday.

Asked if world output could begin to recover by the year-end Gurria said: “I would say yes; the issue of recovery does not mean that we start to have very clear positive figures but that first the world economy stops contracting.”

Upcoming forecasts for OECD member countries will be the first in several revisions not to show a serious deterioration in GDP, Gurria said.

The US will recover before Europe due to the larger economic stimulus package launched by Washington and the fact the US financial crisis started before that in Europe, Gurria said. “Green shoots are appearing,” he said.

Agencies lack credibility

Gurria played down the threat of credit rating cuts for large economies such as the UK and the US. Standard & Poor’s lowered its outlook on the UK to negative on Thursday, putting at risk Britain’s AAA rating.

“It seems absolutely inexplicable that they want to cut the rating of England and that there is talk they are going to cut the rating of the United States,” Gurria said.

“The United States, England, Greece, Spain and Ireland need to give a bit of help to the ratings agencies to see if they recover their prestige and credibility, to see what the rating agencies are worried about,” he added.

Gurria said Standard & Poor’s decision to strip Spain of its AAA rating earlier this year was “insensitive” and based on an evaluation of its economic policy, rather than its ability to repay debt.

Source: Reuters