OECD keeps global growth outlook intact

GENEVA: The Organization for Economic Cooperation and Development (OECD) reiterated yesterday its projection of 2017 global economic growth of 3.3%, with consumption, investment and trade lacking strength.

But the OECD lifted its outlook for the world’s three largest economies — for Japan due to increased industrial production and exports, and for the United States and China because of fiscal support.

The global economy is expected to grow 3.3% in 2017 and to expand 3.6% in 2018, both unchanged from its projections in November, according to the OECD’s interim economic outlook report.

“Overall, the recent improvement in activity is in line with the modest pickup in global growth projected in November,” the report said, adding that greater political commitment to structural reform “is needed to ensure a durable exit from the low-growth trap.”

The Paris-based organisation warned that potential market volatility, financial vulnerabilities and policy uncertainties could derail the modest economic recovery.

Helped by the yen’s depreciation, the Japanese economy — the world’s third largest — is now projected to grow 1.2% in 2017, up from 1.0% projected in November. It will likely expand 0.8% in 2018, unchanged from the previous estimate.

Japan’s economy has been benefiting from growing exports but private consumption remains weak, revealing the fragility of its economic recovery.

Citing anticipated fiscal expansion, the OECD now expects the US economy — the world’s largest — to grow 2.4% in 2017, up from 2.3% projected previously. But the forecast for 2018 was cut to 2.8% from 3.0%.

“Policy choices, including on the composition of fiscal spending, taxation, regulation and trade, are likely to have a significant impact on growth outcomes,” the report said.

The OECD revised upward China’s growth forecasts for both 2017 and 2018. The world’s second-largest economy will likely expand 6.5% this year, up from 6.4% forecast earlier, and by 6.3% in 2018, up from 6.1%.

Even as uncertainty remains over its exit from the European Union, the OECD raised its forecast for the United Kingdom, which is now projected to expand 1.6% in 2017, up from 1.2%. A 1.6% expansion is expected for the euro zone economy, unchanged from the November outlook.