According to the Organisation for Economic Cooperation and Development, the world's industrialised economies will do relatively better this year than it originally forecast.

The OECD sees economic growth across G7 countries -- Canada, France, Germany, Italy, Japan, U.K and U.S. -- to fall by 3.7% this year, a less brutal contraction than the 4.1% drop it projected just three months ago.

The latest GDP forecasts for this year provide slightly improved outlooks for Japan and the Euro area, an unchanged overall projection for the U.S., but a gloomier situation in the U.K.
 
In an interim economic assessment for the OECD countries released on Sept. 3, Jorgen Elmeskov, acting head of economic development at OECD, says that recovery from the global recession is likely to arrive earlier than the group had predicted. However, Elmeskov notes that the pace of activity will remain weak well into next year.

Elmeskov attributes the quicker recovery to several factors.  He says falls in the cost of money market funding, a narrowing of corporate bond spreads, a rebound in equity markets and a moderation in the tightening of bank lending standards have contributed to a marked improvement in overall financial conditions. 

“Nonetheless, bank lending continues to decline and concerns about the health of the banking system remain,” he notes in the assessment.