OECD Raises 2017 UK Economic Growth Forecast To 1

Brittany BishopMar 08, 2017

The world economy will witness modest growth in the next few years but it could be derailed by financial and policy instability, according to the Organisation for Economic Cooperation and Development. It had originally predicted a growth of 1.2% in November but did not upgrade its 1% outlook for 2018 which would the worst performance since 2009.

The OECD report said the US and Canada are projected to lead the Group of Seven countries in economic growth this year, with the next highest G7 country being Germany at 1.8 per cent GDP growth.

Though Washington was not alone in using nationalistic rhetoric, Mann said the OECD had estimated that a 10 per cent increase in USA import costs would percolate through the economy and ultimately lift export costs by 15 per cent.

"Supported by accommodative monetary policy and a modest fiscal easing over the coming years", economy of the euro area would report moderate pace.

"The economic nationalism is a much bigger wildcard because we don't know how the language translates into policy at this point", OECD Chief Economist Catherine Mann told Reuters.

Along with the possibility of different interest rates among the world's major advanced economies and the political uncertainty caused by looming elections in Europe, the OECD identified "significant uncertainty about the future direction of trade policy globally" as a potential barrier to improved growth.

Among the specific country outlooks highlighted by the OECD were the USA, where domestic demand is set to strengthen, supported by gains in household wealth and an upturn in oil production.

The organization's secretary-general, Angel Gurria, says governments "need to take actions that restore people's confidence while at the same time resisting turning inwards or rolling back numerous advances that have been achieved through greater global cooperation".

Many indexes, particularly in the USA, have rallied over the winter to hit record highs. But the forecast for 2018 was cut to 2.8 percent from 3.0 percent. However, the OECD cautioned that consumption, investment, trade and productivity were all far from strong and that growth rates remained sluggish by past standards, sitting below a historical 4% average.

China's growth forecast for this year was raised to 6.5 percent and for next year to 6.3 percent.

Higher commodity prices and easing inflation are supporting a recovery from deep recessions in Brazil and Russian Federation. Japan's GDP growth will accelerate this year to 1.2% from 1% in 2016.

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