Extreme uncertainty in world economic outlook-OECD

By Stefano Bernabei

BERLIN, April 18 (Reuters) - The world economy remains in a state of "extreme uncertainty" despite some signs of improvement in isolated economic indicators, OECD Vice Director General Pier Carlo Padoan told Reuters on Saturday.

The 30-nation Organisation for Economic Cooperation and Development (OECD) has been one of the most pessimistic multilateral observers of the current global recession.

In March, the Paris-based group predicted member economies would contract by 4.3 percent this year with the recession continuing into 2010 -- a much more negative forecast than figures from the World Bank around the same time.

Padoan, talking on the sidelines of an economic conference in Berlin, said there some positive signs emerging. He cited a turnaround in the U.S. financial market, and stabilisation in some national housing markets and sales in some sectors like automobiles, but insisted these remained isolated data.

"We are in a period of extreme uncertainty but to be optimistic I would say that at least there are some indicators which are not as bad as they were in the past," he told Reuters.

"To turn these figures into an economic outlook is not only extremely difficult, but would be mistaken," he said.

While European nations had not implemented such a forceful fiscal stimulus as the United States, Padoan said welfare spending and so-called automatic stabilisers would compensate for that.

He urged countries not to overstretch themselves with spending, particularly nations with already thin financial resources like Italy, which has the world's third highest debt, equivalent to more than its annual economic output.

"In Italy, we risk taking counterproductive measures," said Padoan. "We should be able to take, and to a certain extent we are, measures which are fiscally neutral, which do not change the public deficit." (Writing by Daniel Flynn)