OECD cuts global growth forecast
PARIS: The OECD cut its global growth forecasts, saying the economies of Brazil, Germany and the U.S. are slowing and warning that some emerging markets are at risk of exchangerate volatility. Global gross domestic product will expand 3.0 percent in 2016, the same pace as in 2015 and 0.3 percentage point less than predicted in November, the Organization for Economic Cooperation and Development said Thursday in a report. "Financial stability risks are substantial," the Paris-based organization said. "Some emerging markets are particularly vulnerable to sharp exchange-rate movements and the effects of high domestic debt." Stock markets around the world have plunged this year amid concern that slowing growth in China and a slump in oil prices will slow global expansion. The MSCI World Index fell to its lowest in more than two years last week as crude oil prices slumped below $30 a barrel for the first time in more than a decade. China's growth is now pegged at 6.5 percent this year and 6.2 percent in 2017. With Group of 20 finance ministers and central bankers gathering in Shanghai next week to grapple with the slowdown, the OECD urged them to consider offering more fiscal stimulus to support monetary efforts already underway. "A stronger collective policy response is needed to strengthen demand," the OECD said. "Monetary policy cannot work alone. Fiscal policy is now contractionary in many major economies. Structural reform momentum has slowed. All three levers must be deployed more actively to create stronger and sustained growth." Among major economies, Brazil is the only one currently in recession and it's a recession that is proving deeper and more prolonged that predicted. South America's biggest economy will shrink 4 percent this year, the OECD said, a downward revision of 2.8 percentage points to the forecast. Brazilian output shrank 3.8 percent in 2015 and will stabilize in 2017, according to today's report.