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U.S. will grow faster than Europe amid debt crisis: OECD

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The economy is moving faster in the U.S. than it is across the pond, according to a new OECD report predicting that domestic growth will outstrip Europe’s.

The U.S. economy will expand at a 2.9% annual rate in the first quarter and then a 2.8% rate in the second, according to the Organization for Economic Cooperation and Development. That’s much faster than the 1.9% overall growth rate forecast for the advanced nations considered to be in the Group of Seven.

The credit goes to the rebounding stock market in the U.S., as well as consumer confidence that is near one-year highs and promising movements in the job market, according to the OECD.

The Paris-based group said that, together, European giants France, Germany and Italy will retreat 0.4% during the first quarter and then eke out a shy 0.9% recovery in the second.

Of those, Germany will have the best chances of growth, with 1.5% expected growth in the latter quarter after a flat first quarter. Italy may be facing recession throughout the period, or at best a slight improvement later in the half, according to the report.

“The outlook remains fragile,” OECD Chief Economist Pier Carlo Padoan said of Europe’s weak consumer confidence, high unemployment and tight credit. “We may have stepped back from the edge of the cliff, but there’s still no room for complacency.”

The Eurozone is still mired in a debt crisis and needs the “mother of all firewalls” to protect against future instability, OECD Secretary-General Angel Gurria said Tuesday.

Elsewhere, Canada will have a strong first half of the year, with 2.5% growth projected for both quarters. Japan will start strong with 3.4% growth, followed by a 1.4% bump in the second quarter.

But around the world, dangers remain that could stifle the delicate economic lift, including rising oil prices, weakness in developing markets such as China and turgid increases in world trade and, by extension, demand.

Watch the OECD's video on the report below:

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