OECD's Gurria says stimulus plans beginning to work

By Chris Buckley

BEIJING (Reuters) - Stimulus packages are starting to show results, clearly in China and tentatively in the United States, but governments need to be prepared to do more, the head of the Organisation for Economic Cooperation and Development (OECD) said on Monday.

Angel Gurria, OECD secretary-general, told Reuters that the world economy would not bottom out until 2010 and would probably start growing again towards the end of that year.

Gurria, speaking on the sidelines of a forum in Beijing, said that China's 6.1 percent annual growth in the first quarter showed the government's fiscal stimulus and surging bank loans were making up for about half the country's export shortfall.

"It's a very powerful, very strong, stimulus, which means it is already starting to have some effect," he said.

Gurria said that the combination of higher public spending and support to the banking sector were also helping to stabilise the U.S. economy.

"Altogether, this is starting to generate an impact, and they are starting to see a few positive signals," he said.

But he said that 2009 would remain a very difficult year. Last month OECD forecast that its 30 member nations would contract -4.3 percent this year.

Gurria reaffirmed this outlook, saying that there would be few bright spots in the world economy apart from China and India.