OECD calls US dip a blip, cuts global fore­cast


The OECD on Wed­nes­day sharply low­ered its global growth fore­casts for 2015 and 2016, dragged down partly by a “tran­si­tory” short­fall in U.S. per­for­mance and by busi­nesses and gov­ern­ments skimp­ing on in­vest­ment.

“Global growth is pro­jected to strengthen in the course of 2015 and 2016, but will re­main mod­est rel­a­tive to the pre-cri­sis pe­riod,” the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and Devel­op­ment said.

It pre­dicted the world econ­omy would grow at a rate of 3.1 per­cent this year, down from the 4.0 per­cent in­crease it pro­jected in March.

The growth fore­cast for next year has been re­vised down­ward half a per­cent­age point, from 4.3 to 3.8 per­cent, with an ex­pec­ta­tion that the world econ­omy “will strengthen grad­u­ally to ap­proach its past (pre-cri­sis) av­er­age pace by late 2016.”

The OECD, a pol­icy anal­y­sis body group­ing 34 ad­vanced economies, slashed its out­look for the United States from 3.1 and 3.0 per­cent to 2.0 and 2.8 per­cent for this year and next.

The Paris-based think-tank said the stronger dollar and a bru­tal North Amer­i­can win­ter — which it said caused “tran­si­tory dis­rup­tions” — put a brake on growth in the first quar­ter of 2015, while pre­dict­ing: “Ac­tiv­ity should re­gain steam, with ag­gre­gate de­mand pro­pelled by con­tin­ued em­ploy­ment gains, wealth ef­fects from ris­ing as­set prices, and the boost to pur­chas­ing power from lower oil prices.”

China, too, will grow more slowly than the OECD pre­dicted in March, by two-tenths of a per­cent­age point lower in both years, at 6.8 per­cent and 6.7 per­cent in 2015 and 2016.

“Con­sump­tion will re­main ro­bust” in China, where growth will also be spurred by stepped-up in­fra­struc­ture in­vest­ment, it said.

The OECD said that over­all, “the eco­nomic re­cov­ery from the global fi­nan­cial and eco­nomic cri­sis that broke out in 2008 has been un­usu­ally weak.”

The knock-on ef­fects have in­cluded con­tin­u­ing job in­se­cu­rity, slug­gish devel­op­ment in emerg­ing economies and “ris­ing in­equal­ity nearly ev­ery­where,” the re­port said.

How­ever, the OECD said it ex­pected growth “to be shared more evenly across re­gions of the world” in the com­ing pe­riod.

Its out­look for the eu­ro­zone was un­changed for this year and slightly rosier for 2016, at 2.1 per­cent from 2.0 per­cent thanks to lower oil prices, the weak euro, bet­ter fi­nan­cial con­di­tions and fresh stim­u­lus spend­ing.

But un­em­ploy­ment in the eu­ro­zone will re­main stub­born, de­clin­ing to a still painful 10.25 per­cent by the end of next year, the OECD said.

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