OECD Cuts Global Growth Forecast; The U.S. Leads In Developed Democracies; Germany Leads In Contracting Euro Zone; Japan Growth Down From Last Year

The United States gross domestic product will grow this year at a rate of 1.9 percent, tepid but higher than the euro zone’s -0.6 percent contraction and rebounding Japan’s 1.2 percent growth, according to the latest economic forecast from the 34-member Organization for Economic Cooperation and Development, or OECD.

The Paris group of market-driven developed democracies said global economic growth would end the year up 3.1 percent, buoyed by developing markets and China, which, despite having its GDP growth estimate knocked down below 8 percent by the International Monetary Fund on Tuesday, is still expected to grow 7.75 percent, slightly higher than the government’s own 2013 target.

But the forecast is down from the organization’s November forecast, which said global growth would end 2013 at 3.4 percent. The global slowdown is hitting India particularly hard, with the projection there decreased to 5.3 percent this year from 5.9 percent expected in the previous report.

Europe’s economic powerhouse, Germany, is expected to grow slightly, 0.4 percent -- not enough to lift the euro zone out of negative territory.

Last week, markets gorging on rock-bottom interest rates were rattled after Federal Reserve Chairman Ben Bernanke suggested the U.S. could wind down its unconventional quantitative easing policy of shoveling money into banks to try to spur business development and job growth. The OECD echoed similar concerns Wednesday by saying an end to the aggressive policy of printing money would cause government bond yields to rise quickly, “possibly leading to sharp rises in bond yields and serious negative consequences for growth in a number of advanced and emerging economies.”

The entire OECD report can be read here in PDF format.