Sep 18, 2015
The Organization for Economic Cooperation and Development (OECD) foresaw Wednesday “weakened” growth outlook in the near term as “stagnating world trade and deteriorating conditions in financial market” halt growth in emerging markets and tainted performance of advanced economies.
World growth in 2016 is expected to be 3.6pc, down from a projection of 3.8pc in June.
It projects that the USA will grow by 2.4 per cent this year and by 2.6 per cent in 2016, a strong outlook that includes a resurgent consumer and improving employment picture. Previously back in June, OECD forecasted growth of 6.8% this year.The outlook in the eurozone is the brightest for four years – with growth forecast at 1.6 percent this year and 1.9 percent in 2016.
Global economic growth will be held to about three per cent this year, revised down from 3.1 per cent.
To make growth more inclusive, Ireland’s top priority should be further reducing the still-high levels of post-crisis unemployment, particularly for youth and the long-term unemployed. The currency bloc is projected to expand 1.6% in 2015, revised up from 1.4%.
With the budget looming and electioneering under way, the Organisation for Economic Co-operation and Development (OECD) urged Ireland to use the revival in economic fortunes – the fastest growth in Europe – to solve the legacies of the country’s bankruptcy.
One major uncertainty is whether the emerging markets will be hurt by rising world interest rates or a sharper-than-expected slowdown in China, sparking financial and economic turbulence that could be a “significant drag” on advanced economies, the OECD said.
While the OECD said the strength of the USA economy justifies the Federal Reserve beginning to raise interest rates at a gradual pace, that robustness isn’t enough to brighten the overall outlook for the rest of the world.
But the steady progress made by some of the largest developed economies, including Britain, the U.S. and Germany was maintaining the global recovery. The Brazilian economy is now expected to shrink by 2.8% in 2015 and then by another 0.7% in 2016.
The outlook is therefore weak for many commodity-exporting nations, the OECD said, with Brazil experiencing a deep recession and deep revisions to its projections.
“The bulk of the reduction is in emerging markets and in commodity producers”, Mann said.
The pace of future increases was more important than whether the Fed acted, according to the OECD’s simulations, she said, adding: “The path matters four times as much as the timing”.
China faces a challenge trying to sustain growth while changing its economy from an investment-powered model towards one led by consumers, the OECD said.
Source: OR-Politics.com