Trump elec­tion points to US growth boost: OECD

Kuwait Times - - BUSINESS -

Pres­i­dent-elect Don­ald Trump’s big-spend­ing plan and tax cuts are ex­pected to help dou­ble the US eco­nomic growth rate by 2018, the OECD said yes­ter­day. The US econ­omy will grow by 2.3 per­cent in 2017 and 3.0 per­cent in 2018, said the Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment, re­vis­ing its ear­lier fore­cast.

That com­pares to gross do­mes­tic prod­uct growth of 1.5 per­cent this year, ac­cord­ing to the OECD.

The Repub­li­can prop­erty ty­coon’s team has said he will de­vote $550 bil­lion to re­build­ing de­crepit in­fra­struc­ture. The in­com­ing pres­i­dent also cam­paigned on prom­ises for ma­jor cor­po­rate tax cuts as part of a wide-rang­ing blue­print for the limp­ing US econ­omy.

“GDP is pro­jected to re­turn to a mod­er­ate growth tra­jec­tory in 2017 and strengthen in 2018, mainly due to the pro­jected fis­cal stim­u­lus, which takes ef­fect par­tic­u­larly in 2018,” the OECD said in its re­port. “In­deed, pro­jected fis­cal sup­port will boost GDP growth by just un­der 0.5 and 1 per­cent­age point in 2017 and 2018 re­spec­tively,” it added.

Global growth will also ben­e­fit if the US pres­i­dent-elect’s avowed spend­ing and tax plans boost do­mes­tic in­vest­ment and con­sump­tion, the Paris-based body said.

It now sees world GDP growth ris­ing to 3.3 per­cent next year and 3.6 per­cent in 2018 but stuck to its 2016 fore­cast of 2.9 per­cent. For Bri­tain, the OECD said it was less pes­simistic than it was in Septem­ber when it halved its 2017 growth fore­cast in the wake of Bri­tish vot­ers opt­ing to leave the Euro­pean Union.

It re­vised up its fore­cast for this year to 2.0 per­cent and to 1.2 per­cent for 2017. “The un­pre­dictabil­ity of the exit process from the Euro­pean Union is a ma­jor down­side risk for the econ­omy,” the re­port said. The OECD also sug­gested that fis­cal ini­tia­tives could be the an­swer for other gov­ern­ments to help drive the global econ­omy af­ter a “low-growth trap” for the last five years. “Durable exit from the low-growth trap de­pends on pol­icy choices be­yond those of the mon­e­tary au­thor­i­ties-that is, of fis­cal and struc­tural, in­clud­ing trade poli­cies-as well as on con­certed and ef­fec­tive im­ple­men­ta­tion,” OECD chief econ­o­mist Catherine Mann said in the re­port. — AFP

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