The latest Economic Outlook from the Organisation of Economic Cooperation and Development (OECD) paints a largely positive picture for global economic conditions--but with a considerable warning.  GDP is rising across the globe, and the OECD is raising its growth projections for 2010 and 2011.  But debt clouds the otherwise sunny picture.  From the OECD press office:

Trade flows are rising again. Strong growth in China and other emerging markets is helping to pull other countries out of recession. But at the same time, the risk of overheating and inflation is growing in emerging markets. A boom-bust scenario cannot be ruled out, requiring a further tightening in countries such as China and India. The knock-on  effect would be slower growth in other regions. Exchange rate flexibility could ease some of the pressure on Chinese monetary policy and provide more scope for addressing domestic inflation, says the OECD. 

Instability in sovereign debt markets poses another serious risk. It has highlighted the need for the euro area to strengthen its institutional and operational architecture. Bolder measures need to be taken to ensure fiscal discipline, says the Outlook.Several countries are already taking early action to enhance the credibility of their fiscal consolidation plans and this is very welcome.

Here's a look at the fiscal balance that has OECD analysts concerned:

And here is OECD Chief Economist, Pier Carlo Paduan discussing the risks to global recovery:

Read more here.