Global economic agency urges more infrastructure spending
AN INTERNATIONAL economic agency said on Monday that the kind of infrastructure spending promised by United States Presidentelect Donald Trump could boost global growth, but warned that protectionist tendencies hurt prosperity.
The Organisation for Economic Cooperation and Development (OECD) overall hit an upbeat note in its latest world economic outlook Monday, thanks in part to stimulus efforts planned in the US and China. The OECD raised its forecasts for global growth to 3.3 per cent for next year, up from 3.2 per cent in its last outlook.
After years of low growth, This April 17, 2014 file photo shows ongoing construction of a rail tunnel at the Hudson Yards redevelopment site on Manhattan’s west side in New York. New York Governor Andrew Cuomo wants to build a new rail tunnel under the Hudson River and hopes US President-elect Donald Trump follows through on his promises to improve ageing US infrastructure. “there is reason to hope that the global economy may be at a point of inflection”, as low interest rates give governments more freedom to lower taxes and spend on infrastructure and education, OECD chief Angel Gurria said.
The Paris-based intergovernmental agency encouraged governments such as Germany to take more advantage of this window of low rates.
Gurria noted that markets have rallied on Trump’s promises to cut taxes and increase infrastructure investments, but said it remains unclear how many of those pledges Trump can or will fulfil.
“There is an expectation that if this mix is actually practised; if it happens, if it becomes real, there will be an increase in economic activity,” he said.
The OECD raised US growth forecasts slightly to 2.3 per cent for 2017, and predicted 3 per cent growth in 2018 based on “an assumed easing of fiscal policy”. The forecast for eurozone growth next year was also shifted upward to 1.6 per cent.
After Trump’s campaign tirades against free trade, the OECD also warned that growth could be threatened by protectionism.
That “would likely raise prices, harm living standards and leave countries in a worsened fiscal position. Trade protectionism may shelter some jobs, but it will worsen prospects and lower well-being for many others,” OECD chief economist Catherine Mann told reporters.