(Adds Gurria comments from paragraphs 8)
By Phil Stewart
ROME, March 30 (Reuters) - The Organisation for Economic Co-operation and Development (OECD) sees the 30-nation bloc's economy contracting by 4.3 percent this year and staying "mostly flat" in 2010, General Secretary Angel Gurria said on Monday.
The OECD's new economic forecasts to be released on Tuesday will be "somewhat more pessimistic than we thought only a few weeks ago", Gurria said in Rome in a closed-door session of a meeting of labour and welfare ministers from the Group of Eight.
"It says that the OECD is looking at minus 4.3 percent and probably of greater concern it says that in 2010 it is going to be pretty flat, maybe a little bit below the line, maybe a little above the line, but mostly flat," he said in initial comments to the session heard by reporters.
The OECD had previously predicted a 0.4 percent contraction in its November forecast and Gurria said as recently as March 1 that 2010 should be "positive, but weak".
Gurria had also said last Friday that the new lower forecast for 2009 GDP shrinkage would be 4.2 percent.
"The forecasts are revised right up to the last minute, and the final forecasts will be published tomorrow," said an OECD spokesman.
Unemployment in the major OECD countries could approach 10 percent by next year, "practically with no exceptions", said Gurria.
RECOVERY UNCERTAIN
According to the text of Gurria's closed-door address released to reporters after his speech, the OECD acknowledged that its forecasts for next year and beyond were still very fragile.
"The perspective is so uncertain because this is our first synchronised global fall. In previous crises, there was always someone to call for help, there was always a country that could bail us out," he said.
"But this time all the engines of the global economy are 'in the repair room'."
Gurria praised the U.S. bank rescue plan, calling it a "welcome initiative", and endorsed macroeconomic stimulus and aggressive monetary expansion in OECD countries.
"Monetary policy should be used fully by keeping or bringing rates near zero. Measures introduced by central banks to enhance liquidity in markets have also helped to compensate for the tightening in financial conditions."
Still, Gurria said that fiscal stimulus packages introduced in many countries contained "rather limited" funds for labour market and social policy measures, adding this could turn into "a missed opportunity".
He suggested nations seek to offset rounds of mass layoffs by turning to measures like "short-time working subsidies or temporarily reducing social security contributions".
(Additional reporting by Francesca Piscioneri and Anna Willard; writing by Phil Stewart and Stephen Brown; editing by Victoria Main)