World economic grouping OECD said on Friday the global economy had come out of “free fall”, offering hope of incipient recovery late this year to investors unnerved by rising US government debt. The central bank governor of Japan, the world's second biggest economy, also said new data now banished notions of the country “falling off a cliff”. The US dollar fell to a 2009 low as fears grew the United States could find itself at risk of being stripped of its triple-A rating, a move that would have wide implications for global investment already throttled by the crisis. Ratings agency S&P stirred concern on Thursday by suggesting Britain could face such a downgrading. US stock index futures rose on comments from Moody's rating agency which said it was comfortable with the US triple-A rating “but it is not guaranteed for ever”. All three major US indexes rose. Organization for Economic Cooperation and Development (OECD) head Angel Gurria, moving to dispel such uncertainty, spoke of a need for ratings agencies, widely criticized for their failure to predict approaching world crisis, to “recover their prestige and credibility”. “It seems absolutely inexplicable that they want to cut the rating of England and that there is talk they are going to cut the rating of the United States,” he said. Gurria acknowledged there was a risk the crisis, which began last year with a collapse in the US housing market and is now hitting trade and industry throughout the world, could yet be prolonged without future fiscal and credit discipline. “The rate of the slowdown is easing; we're no longer in a free fall,” Gurria said. “The (stimulus) packages in Europe aren't as big as in the United States, which is why the States is recovering quicker and the crisis is closer to its end.” Asked if world output could begin to recover by year end Gurria said: “I would say yes, the issue of recovery does not mean that we start to have very clear positive figures but that first the world economy stops contracting.” Europe's biggest bank HSBC Holdings signalled continuing problems in the financial industry, declaring that “the rest of 2009 and probably much of 2010 will be challenging”. HSBC has weathered the crisis better than most thanks to a traditionally strong balance sheet and a high level of deposits in Asia. The scale of US stimulus packages and government debt, however, is causing concern on markets.
