IN its latest Economic Outlook, the OECD has indicated
a further sharp
downturn in emerging market economies and world trade has weakened global
growth to around 2.9% this year and
is a source of uncertainty for near-term prospects.
In its report, the OECD has projected a gradual
strengthening of global growth in 2016 and 2017 to an annual 3.3% and 3.6%
respectively. But a clear pick-up in activity requires a smooth rebalancing
of activity in China and more robust investment in advanced economies.
Emerging market challenges, weak trade and concerns about potential output
suggest higher downside risks and vulnerabilities compared with the OECD’s
June Outlook.
Presenting the Outlook in Paris, OECD Secretary-General Angel Gurría said:
“The slowdown in global trade and the continuing weakness in investment are
deeply concerning. Robust trade and investment and stronger global growth
should go hand in hand. G-20 leaders meeting in Antalya need to renew their
efforts to secure strong, sustainable and balanced growth.”
In
the US, output remains on a solid growth trajectory, propelled by household
demand, with GDP expansion expected to be 2.5% next year and 2.4% in 2017.
The recovery in the euro area is set to strengthen, helped by accommodative
monetary policy, lower oil prices and an easing of the pace of budget tightening.
Euro area activity is expected to grow by 1.8% in 2016 and 1.9% in 2017.
In Japan, recovery was derailed in 2015 by a sharp slowdown in demand from
other Asian economies and sluggish consumption. Japan’s GDP growth is expected
to accelerate to 1.0% next year, but to slow to 0.5% in 2017 due to the planned
consumption tax hike.
Economic growth in China is projected to slow to 6.8% in 2015 and to continue
to decline gradually thereafter, reaching 6.2% by 2017, as activity rebalances
towards consumption and services. Achieving this rebalancing, whilst avoiding
a sharp reduction in GDP growth and containing financial stability risks,
presents significant challenges.
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