Global eco­nomic agency urges more in­fra­struc­ture spend­ing

Jamaica Gleaner - - BUSINESS -

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.

AP

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