OECD: Pick-up in world economic growth

> Fastest pace since 2010 but investment rates too low to sustain the expansion, says think tank

PARIS: The world economy is growing at its fastest pace since 2010, but projected investment rates have remained too low to sustain the pick-up in activity, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday.

In its twice-yearly economic outlook, the Paris-based think tank maintained its prediction of 3.6% world economic growth in real terms for 2017, rising to 3.7% in 2018. The growth rate is then predicted to fall back slightly to 3.6% again in 2019.

Weak demand growth worldwide as well as fears over political and regulatory issues have driven “the persistent weakness of investment” since the global financial crisis of 2008, the OECD said.

Impaired banking sectors in some countries and overly restrictive bankruptcy regimes have also played their part in hampering investment, the organisation said.

“Growth has picked up momentum and the short-term outlook is positive, but there are still clear weaknesses and vulnerabilities,” OECD secretarygeneral Angel Gurria said.

“Countries should implement reform packages that catalyse the private sector to promote productivity, higher wages and more inclusive growth,” Gurria urged.

Countries with “emerging market economies” such as China, India, Russia and Brazil were seeing improved growth thanks to renewed infrastructure investment in China and recovery from recession in major commodity-exporting countries, but that growth remained “softer than in the past,” the OECD said.

It suggested that such countries would benefit from lowering barriers to foreign trade, investment and firm entry. Reducing state control of business would also boost growth in those countries, the OECD said.

Chinese growth was projected at at 6.8% in 2017, 6.6% in 2018, and 6.4% in 2019, which the OECD said partly reflected “the ongoing rebalancing in China’s growth model.” – dpa