OECD sees growth at decade-low

PARIS: The global economy is growing at the slowest pace since the financial crisis as governments leave it to central banks to revive investment, according to the Organisation for Economic Cooperation and Development.

“The world economy is projected to grow by a decade-low 2.9% this year and next, the OECD said yesterday in its Economic Outlook, trimming its 2020 forecast from an estimate of 3% in September.

Offering meagre consolation, the Paris-based policy forum forecast growth would edge up to 3% in 2021, but only if a myriad of risks ranging from trade wars to an unexpectedly sharp Chinese slowdown is contained.

A bigger concern, however, is that governments are failing to get to grips with global challenges such as climate change, the digitalisation of their economies and the crumbling of the multilateral order that emerged after the fall of communism.

“It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural,” OECD chief economist Laurence Boone wrote in the report.

“Without clear policy direction on these issues, uncertainty will continue to loom high, damaging growth prospects,” she added.

Among the major economies, US growth is forecast at 2.3% this year, trimmed from 2.4% in September as the fiscal impulse from a 2017 tax cut waned and amid weakness among the United States’ trading partners.

The world’s biggest economy is seen growing 2% in 2020 and 2021.

China, which is not an OECD member but is tracked by it, was forecast to grow marginally faster in 2019 than had been expected in September, with growth of 6.2% rather than 6.1%.

In the euro area, growth is seen at 1.2% in 2019, up by 0.1 percentage point on the September forecast.

The outlook for Britain improved marginally from September as the prospect of a no-deal exit from the European Union recedes.

British growth is upgraded to 1.2% this year from 1% previously.