The Paris-based Organisation for Economic Co-operation and Development said that GDP growth accelerated strongly in the USA in the second quarter to 0.9%, compared with 0.2% in the previous quarter. It is due to release new forecasts on Tuesday.
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It comes as the OECD says there is a broad-based and robust recovery underway in Ireland, but there are still risks to the economy.
For 2016, the OECD lowered the global growth outlook to 3.6 percent, a reduction of 0.2 percentage points from three months ago. However, it lowered its forecast for next year from 2.8 percent previously to 2.6 percent.
“The marked slowdown in Chinese import demand has important spillover effects on global growth, particularly in emerging economies with close trade links to China, and those that depend on commodities”, it noted.
In the U.S., progress on closing output and employment gaps warrants an upward interest rate path, but at a very gradual pace, the OECD said.
While the United States recovery was now solid, the OECD said the picture worldwide was muddied by “puzzles” in other big economies with erratic Japanese data, the euro area’s recovery lacking some vigor and activity in China hard to assess.
India is still expected to be the fastest-growing major economy over the coming two years, despite growth being revised down by 0.1 points to 7.2% in 2015 and again to 7.3% in 2016.
The think tank sees uncertainties in emerging market economies, whether it will be exposed by rising global interest rates or a sharper-than-expected economic slowdown in China.
“Global growth prospects have weakened slightly and the outlook is clouded by important uncertainties”, said OECD chief economist Catherine L Mann.
The OECD saw more arguments speaking in favor of the US Federal Reserve raising interest rates rather than keeping them unchanged at the Fed’s policy meeting starting Wednesday. The number of unemployed in the OECD region in July was 41.6 million persons, 7.3 million less than in January 2013, but still 7.1 million more than in July 2008, immediately before the crisis. The OECD forecast its economy would contract 2.8 per cent this year and 0.7 per cent next year as it struggles with a collapse in the price of commodities it exports.
But it warns US growth could be thrown off by instability in its markets around the world and points to lacklustre business investment as a sign.
“The survey provides a prescient analysis of the challenges now faced by Ireland and of the policies to address these in areas such as fiscal sustainability, financial stability, inclusive growth, productivity and environmental sustainability”.
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Finally, there are increasing doubts about the medium-term growth of economic potential in advanced and emerging economies alike.
