PARIS (AFX) - The OECD said a recovery is unfolding in the OECD area, led by the US. Europe is likely to catch up later in the year, while Japan will only emerge slowly from recession, the OECD said in its semiannual Economic Outlook. "The rapidity and vigour of the upturn in North America contrasts with its more tentative nature in Europe, where output growth is not projected to strengthen markedly before the second half of 2002, while Japan is set to emerge only slowly from its third recession in a decade," it said. It said there are so far only limited signs of a bottoming out in the euro zone, except in surveys of business sector expectations, and household confidence and spending remain subdued. But growth should gather pace as capital spending recovers and the effects of the US rebound feed through via higher exports, ithe OECD said. Japan will also be helped by exports, but output growth there is likely to remain anaemic, it said. But virtually all OECD economies should be growing quite rapidly by the second half of the year, and the recovery should become more generalised in 2003, the organisation said. As the economy recovers, monetary policy will need to be moved back more gradually to a more neutral and ultimately to a restrictive stance, and renewed restraint may be needed in fiscal policy, it said. The OECD said the global upturn is being driven by policy easing and the dissipation of a number of negative forces, and confidence has bounced back from the Sept 11 terrorist attacks on the US more rapidly than previously expected. The correction of the inventory overhang is well advanced in many countries and the collapse in investment in information and communication technologies is giving way to a cautious recovery, it said. Even during the slowdown, household spending was resilient despite rising unemployment and the bursting of the stock market bubble, particularly in the US. This consumer resilience probably explains the relative shallowness of the recent downturn, the OECD said. Strong house prices have also helped cushion declines in net wealth in some countries, enabling consumers to finance spending by withdrawing housing equity, it said. However, the relative resilience of household spending during the downturn means that it is unlikely to show its traditional dynamism during the upswing, which may therefore be more dependent on the normalisation of business inventories, it said. The OECD identified a number of risks to its recovery forecast. On the upside, investor confidence could return more strongly and a new high-tech cycle could rapidly become established, particularly while current stimulative policies remain in place. And on the downside, there is the risk that Middle East tensions could lead to a durable increase in oil prices. The OECD assumes that oil prices will average 25 usd per barrel over the projection period, but said that recent developments show that higher levels cannot be ruled out. "A temporary small price hike, perceived as such, would not visibly alter the shape of the cycle, but a lasting and sizeable increase would significantly worsen the... pressure on margins and confront some central banks with a serious dilemma," it said. The OECD calculates that a maintained 10 usd rise in oil prices would depress activity by 0.2 percentage points in the US, around 0.3 points in the euro zone and by 0.4 points in Japan. Such a shock would push up US and euro zone inflation by around 0.5 points. Other downside risks include the possibility of a sharp fall in equity prices, more cautious consumer behaviour as a result of indebtedness and tough labour market conditions.