Economic growth in the G7 countries is expected to be firmer through the first half of 2012, although the recovery is likely to go at different speeds in North America and Europe, the OECD said.

The latest Interim Economic Assessment predicted the G7 economies will grow by 1.9 per cent in both the first and second quarters of 2012. “Our forecast for the first half of 2012 points to robust growth in the United States and Canada, but much weaker activity in Europe, where the outlook remains fragile,” chief economist Pier Carlo Padoan said. “We may have stepped back from the edge of the cliff, but there’s still no room for complacency.”

The US is projected to grow at 2.9 per cent in the first quarter and 2.8 per cent in the second quarter, due to the ongoing rebound in employment, stronger consumer confidence, higher equity prices and credit growth. Canada is projected to grow by 2.5 per cent during each of the first two quarters.

Europe’s weak consumer confidence, climbing unemployment and tight credit have moved the OECD to project that Germany, France and Italy will shrink by 0.4 per cent on average during the first quarter, before a moderate 0.9 per cent growth recovery in the second quarter.

The German economy is expected to grow by 0.1 per cent in the first quarter and 1.5 per cent in the second, while French economic growth is projected at -0.2 per cent and 0.9 per cent for the two quarters, respectively. The OECD said the outlook for Italy has been more positive recently, despite weak industrial production and household sentiment.

“Government action will continue to be critical, particularly in the euro area, where unfinished policy business on fiscal frameworks, financial firewalls and fundamental structural reforms must move ahead,” Padoan said.

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