The worst appears to be over for the world economy and a “fragile” recovery is underway, but permanent “economic and social damage” have been wrought by this, the tail-end of the “deepest decline for more than 60 years,” a new report says.

The Organization for Economic Cooperation and Development said it’s the first time in two years its Economic Outlook have seen things rosier. The OECD secretary-general, Angel Gurria, said economic bail-outs averted catastrophe.

“But the next few months will be equally testing,” he was quoted as saying. He warned a plan and timeline for phasing out emergency measures were needed.

The good news for oil consumption was that U.S. economic activity expected to fall only 2.8 percnet and not the four percent seen in March. In contrast, China’s economy is seen growing 9.3 percent in 2010 after growing nearly eight percent this year.

While Europe and Japan are in the doldrums, Russia’s economic activity is forecast to drop by almost seven percent in 2009 but could gain four percent next year.

The OECD also cautioned states against ending tax breaks and spending measures too soon.

ws@scandoil.com