A look at economic developments around the globe

September 09, 2010 03:31 PM EDT

The Associated Press

LONDON — A leading international economic body said the global economy will recover slower than expected, but that a double-dip recession remains unlikely. The Paris-based Organization for Economic Cooperation and Development cautioned governments around the world against hurting the economic recovery by reducing spending too much and too soon.

The OECD's advice against economic prudence departs from its view a few months ago when it recommended that governments curb their budget deficits.

Elsewhere, the Bank of England held interest rates steady at a record low of 0.5 percent for the 18th straight month on growing worries over another recession.

Most economists forecast rates to remain at that level well into next year and expect the central bank to restart its 200 billion pound ($308 billion) asset purchase program to boost the economy.

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MADRID — Spain's Parliament approved labor market reforms aimed to shake up a listless economy and help cut a ballooning deficit that has fanned fears of another Greek-style crisis.

However, most parties voted against the changes, and union leaders are gearing up for a planned general strike later this month, which they say is more justified than ever.

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BERLIN — Germany's annual inflation rate dipped to 1 percent in August from 1.2 percent in July despite a strong year-on-year rise in oil prices. Consumer prices were unchanged in monthly terms, the Federal Statistical Office said.

Inflation in Germany — Europe's largest economy — has lingered around 1 percent for months and shows little sign of breaking out of that range. German data are important to interest rate decisions by the European Central Bank.

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TOKYO — Japan said it plans to sign a free trade pact with India that will rid tariffs on 94 percent of traded goods.

Kyodo News agency said Tokyo has asked New Delhi to cut tariffs on Japanese vehicles, while India asked Japan to import more generic drugs and expand job opportunities in Japan for Indian workers.

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BEIJING — The U.S. has slipped two spots to No. 4 in the ranks of competitive economies, falling behind Sweden and Singapore due to huge deficits and pessimism about government.

The Geneva-based World Economic Forum said Switzerland retained the top spot for the second year in the annual ranking. It combines economic data and a survey of more than 13,500 business executives.

Sweden moved up to second place while Singapore stayed at No. 3.

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MUMBAI, India — Car sales in India surged to a record for the second month in a row in August on strong demand before the holiday season. The Society of Indian Automobile Manufacturers said car sales totaled 160,794 vehicles last month, up 33.2 percent from the year before.

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SEOUL, South Korea — South Korea's central bank left its key interest rate near a record low at 2.25 percent for the second straight month due to a weakening outlook for the global economy.

The country's economy has rebounded strongly from the worldwide recession and has expanded for six consecutive quarters. Its recovery has been buoyed by low borrowing costs, government stimulus spending and robust exports.

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PHNOM PENH, Cambodia — Chinese firm Erdos Electrical Power & Metallurgical Co. said it will invest up to $3 billion in Cambodia's energy, property and metal processing sectors.

Eang Sophalleth, an assistant to Prime Minister Hun Sen, said the company plans to build a 700-megawatt coal power plant in the coastal province of Preah Sihanouk and to invest in real estate and aluminum processing for both the local market and export.