OECD Maintains World Growth Outlook But Warns Recovery Is Weak

22 September, 2017, 00:41 | Author: Garry Little
  • Reserve Bank assistant governor Luci Ellis

The OECD now expects global economic growth of 3.5% in 2017, rising to 3.7% in 2018.

The Paris-based economic think tank now expects the Canadian economy to grow by 3.2 per cent this year, outperforming every other country in the G7 group of advanced economies (i.e. France, Germany, Italy, Japan, the United Kingdom, and the U.S.).

The OECD puts Britain's projected economic growth for 2018 at 1.0 percent, down 0.6 point from the previous year, due to uncertainties over its planned exit from the European Union.

Its global growth forecast for this year was left at 3.5 percent for this year, but next year's was revised up by 0.1 percentage point to 3.7 percent.

And for next year it is forecasting growth of 1.9 percent for the eurozone, 0.1 percentage point more than previously estimated but below the 2.4 percent projection for the U.S.

Analysts said the growth of the world's second-largest economy remains on track despite weakening indicators for August. 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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"The underlying health of China's economy remains relatively firm", said UBS China economists in a research note. "Structural efforts need to be intensified to bolster the nascent investment recovery, to address slow productivity growth and to ensure the recovery yields benefits for all", Mann added in her address.

However, the pace of growth in Canada is expected to slow in the second half of the year.

Japan's growth forecasts were raised by 0.2 points each to 1.6% and 1.2%, respectively.

Growth in the major emerging market economies has improved overall, helped by a rebound in some commodity producers and public infrastructure investment in China, although growth remains subdued in a number of oil-exporting economies.

The relative slowdown was due to the implementation of a goods and services tax and the sudden withdrawal late a year ago of higher denomination banknotes. Consumer spending and business investment are strong, while wage growth has yet to take off, it said.

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