OECD cuts global growth fore­cast

The Pak Banker - - COMPANIES/BOSS -

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.

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