The Paris-based OECD, whose members include Canada, the United States and numerous world's richest economies, said businesses and consumers are increasingly confident and employment and trade are recovering.
"Despite the fall in the pound which has led to some high profile attempts by foreign companies to snap up United Kingdom firms, domestic and overseas buyers are proceeding with caution".
The improvement would also not be enough to satisfy people's expectations for better standards of living and reduce growing income inequality, he said.
It predicts that the economy will expand by 3.8% this year, up from its earlier forecast of 2.4%. That discontent was seen as a key factor behind Donald Trump's victory in the race for the U.S. presidency, since when he has pledged to put "America first". The decline of middle-skilled jobs was another factor, as was the drop in manufacturing employment that had continued in nearly all of the 35 OECD countries.
"Weaker growth could push the unemployment rate above 5%".
Its outlook for the USA noted that risks remained "sizeable". "Inflation developments also warrant a gradual phasing out of the negative interest rate policy; in particular, the negative deposit rate could be raised toward the end of 2018 to make the policy rate corridor symmetric again".
By contrast, it lowered its forecast for the USA economy, and now expects growth this year of 2.1%, down from 2.4% in March.
The think tank increased its global economic growth forecast for this year by 0.2% from its previous estimate of 3.3% growth. Namely, the OECD believes financial markets are anticipating even better economic growth outcomes than are likely, which heightens the risk of a "snap back" in asset prices.
Despite the evident strength of recovery, the OECD said the banking system here was still impaired, noting that borrowing conditions remained tight for SMEs, despite the accommodative euro-area monetary policy, while new lending was still being outpaced by debt repayment.
"As past experience has shown, rapid house price gains can be a precursor of an economic downturn, especially when they occur simultaneously in a large number of economies", it said.