OECD Says Global Growth Improving, But Self Sustained Recovery Not Secured

OECD Says Global Growth Improving, But Self Sustained Recovery Not Secured

The global economy is projected to grow by 3.5% this year and 3.7% in 2018 and the growth of major advanced economies remains on track.

As inflation takes a toll on consumer spending and Brexit uncertainty dents business confidence, the United Kingdom will drop from the second fastest growing G7 economy in 2016 to the second slowest this year and the slowest in 2018, the think tank for wealthy nations predicts.

Annual growth was running at 1.8 per cent at the end of June.

Meanwhile, the organization's outlook for global economic growth was unchanged at 3.5 per cent for this year and up slightly at 3.7 per cent for 2018, compared with 3.6 per cent in its previous forecast.

Global growth momentum has improved and is more broad-based now, yet a self-sustained recovery is far from secured as inflation remains subdued and there exists an unmet need for structural reforms, the Organization for Economic Cooperation and Development said Wednesday. Monetary policy should remain accommodative in some economies but with an eye on financial stability so as to remain supportive of further rebalancing towards fiscal and structural initiatives.

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It also says interest rate support remains necessary to ensure the recovery is sustained. Uncertainty over the country's exit from the European Union will continue to hobble its economy, the OECD said.

World growth was 3.1 per cent in 2016.

The OECD predicted better than expected growth in Russian Federation - 2% rather than 1.4% this year and 2.1% rather than 1.6% next year. Its June forecast noted the economy was gaining steam, propelled by government spending on infrastructure, social housing, education and innovation, as well as rising household wealth and rebounding business investment, particularly in the resource sector.

In India, the transitory effects of demonetisation and of the implementation of the Goods and Services Tax (GST) have led to a downward revision in growth projections, to 6.7 percent in 2017 and 7.2 percent in 2018.

The prediction of 1pc growth for UK GDP in 2018, in this interim update of economic outlooks, would still constitute the lowest level of growth in the UK economy since 2009, during a recession.

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