Rising confidence and more favourable international trade conditions may lead to more buoyant demand that needs a more rapid rise in interest rates, according to its latest Economic Outlook.

The report also states that risks also derive from the uneven pace of the global recovery and volatility in financial markets and “overheating in emerging market economies”.

“After weathering the crisis well in 2009, the Australian economy is projected to experience strong growth in 2010 and 2011, above its trend rate,” the OECD says, predicting economic growth of 3.2 percent this year and 3.6 percent in 2011.

“There are many icebergs the ship has to negotiate before we’re out of jail here. This is going to be a 10-year process, not a one year process,” said deputy director of the OECD’s financial and enterprise affairs, Dr Adrian Blundell-Wignall.

Blundell-Wignall says so long as underlying banking problems remain, so does the threat of a ‘double-dip’ recession.

Changes to accounting rules, and the shifting of bad assets to big central banks in the US and Europe means the system is still unstable, he said. “They have to be paid back… If you put this collateral back to them what would their situation be? That’s why credit isn’t supporting this recovery.”

However, Blundell-Wignall states this is his own view, not that of the OECD.

In an interview on the ABC’s AM program, Dr Hitendra Patel from Hult International Business School said the ‘global financial crisis’ was not as global as some first thought.

“Those countries which have been sound in economy fundamentally are countries like China, Brazil, India, Indonesia,” he noted. “And they have fundamental indicators and trends that support that these economies are on the way to moving forward. They got slowed down slightly but they are going to continue basically rushing forward.”

Patel says observing the stock markets of growth economies like Brazil, China and India will give an indication of investment trends. His advice is to “continue looking global and to see the world as one economy”.

The Organisation for Economic Cooperation and Development recently predicted that global growth will be 3.4 percent this year, up from an initial projection of 2.3 percent.

“This invitation to join the Organization for Economic Cooperation and Development is well-deserved recognition of Chile’s economic development success and its on-going commitment to economic growth,” he said. “Chile is one of the most economically dynamic countries in Latin America delivering rising living standards and attracting major foreign investment.”

Crean said that as a member of APEC, Chile will be able to bring a broader regional perspective to OECD discussions.

The OECD recognises countries that have attained a relatively high level of development and share a commitment to the market economy and democracy.

Chile is scheduled to formally accept the invitation to join the OECD on 11 January, 2010.

While Asian economies are driving the majority of the growth, the OECD also noted the USA’s unexpectedly strong rebound. However, it warned that the growth needs to be made sustainable after countries withdraw government stimulus measures.

“There are a number of risks that could complicate that transition,” said Angel Gurria, OECD secretary general, citing the danger of a ‘double-dip’ recession if imbalances such as high unemployment and weak consumer spending continued.

“If we keep on adding to the debt, even in the midst of this recovery, at some point people could lose confidence in the US economy in a way that could actually lead to a double-dip recession.”

“This decision shows Australia’s strong reputation in finance and trade finance in particular and will give us a stronger voice in a range of multilateral fora,” said Minister for Trade Simon Crean.

“The presidency of the Berne Union is an opportunity for Australia to continue to play a significant influencing role in shaping infrastructure around trade finance issues as well as shaping the agenda to promote free trade, influence the continuation of open and transparent trading rules and develop a sustainable response toward recovery from the global financial crisis.”

Members of the Berne Union finance about 10 percent of the world’s trade, and collaborate on financing issues such as risk and trade management strategies. It also has close ties with the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development and the International Finance Corporation.

The average OECD unemployment rate is expected to come close to 10 percent; Australia’s is just 5.8 percent in comparison, according to the Australian Bureau of Statistics. The OECD report says unemployment would have been almost two percent higher without the government’s stimulus actions.

However underemployment, where employees work less hours than they want to, may be a future problem.

“Many of the critics of the stimulus package underestimate this impact out there of reduced hours,” said Treasurer Wayne Swan.

“That’s just another reason why we must keep in place the measures to support the economy that we’ve got in place over next year, and it’s why we must strive to make every effort to strengthen our economy given the weakness of the global economy.”

A joint report with the Organisation for Economic Cooperation and Development (OECD) and the UN trade and development agency (UNCTAD), the WTO states that many economies had installed “trade defence mechanisms”.

“Some of them contain elements that favour domestic goods and services at the expense of imports,” according to the report.

It then called on political leaders to “to take the appropriate policy actions so that trade and international investment can help economies recover from the global crisis on a sustained basis” and urged governments to “start planning a coordinated exit strategy that will eliminate these elements as soon as possible”.

In Singapore, Mr Crean will attend the APEC Meeting of Ministers Responsible for Trade, which he says will boost political energy going into the next Doha round of international trade negotiations.

“Concluding Doha as quickly as possible would boost global economic confidence and be a key element in the international response to the global financial crisis,” said Crean. “APEC can also contribute to the global economic recovery by enhancing the flow of trade and investment in our region.”

He added: “We should renew our commitment not to raise protectionist barriers to trade and investment, and forge ahead with our core agenda of regional economic integration and structural reform.”

Crean will also attend the OECD Roundtable on Sustainable Development in Singapore to discuss potential activities from an economic and trade perspective that will meet the challenge of climate change.

In Vietnam, Crean will co-chair the 8th Joint Trade and Economic Cooperation Committee with the Vietnamese Minister of Planning and Investment Vo Hong Phuc to discuss key sectors in the Australia-Vietnam bilateral relationship.

“Compared with the previous quarter, the value of exports and imports of goods and services in OECD countries, measured in seasonally adjusted current price US dollars, continued to drop significantly, albeit less dramatically,” stated the OECD report.

It added that the overall trend is “remarkably similar across countries, backing up the notion of a synchronised trade collapse”.

The rate of decline has shown signs of easing in Japan, the UK and the USA, although none have shown positive net trade figures so far this year.