The Organisation for Economic Co-operation and Development (OECD) is calling for urgent action by world leaders to tackle slowing growth.
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The OECD calls for strong policy responses from countries to address weak growth, and warns that governments mustn’t rely exclusively on monetary policies, which have proven insufficient o boost demand and produce growth. It also lowered its outlook for global economic growth to 3.0 per cent this year and 3.3 per cent in 2017 – a decrease of 0.3 for both years.
“The downgrade in forecasts is widespread, reflecting a broad range of disappointing income data in the fourth quarter of 2015 and the recent weakness and volatility in global financial markets”, the OECD officials said.
Stock markets around the world have plunged this year amid concern that slowing growth in China and a slump in oil prices will slow global expansion.
The body said that whereas relatively healthy growth in emerging countries had in previous years partially compensated for a slowdown in emerging nations, this was now no longer the case.
The Organization for Economic and Cooperation Development (OECD) announced in its latest study published Thursday that it lowered its forecast of global growth in 2016 by 0.3 percentage point to 3 percent.
Simulations conducted by the OECD estimate that an increase in public stimulus spending amounting to 0.5 percent of gross domestic product would result in increased economic growth. There were also downgrades for the other G7 countries – Germany, France, Italy, Japan and the United Kingdom – as well as Brazil.
Earlier this month, India’s Central Statistics Office (CSO) said the country’s economy would grow at a 5-year high of 7.6 per cent in the fiscal ending March, overtaking a slowing China. The OECD cut 0.4 points off eurozone growth in 2016 and 0.2 points off eurozone growth in 2017, reducing its GDP estimates to 1.4% and 1.7% respectively.
The OECD now expects Canada’s economy to expand 1.4 percent this year as the collapse in oil prices takes a toll. It also shaved 0.3 points off its 2017 forecast, reducing it to 3.3%. Canada’s growth rate in 2015 was just 1.2 percent, so 2016 is still predicted to be slightly better.
The OECD has further downgraded its projections for the world economy from 3.3% to 3%, saying strong growth remains elusive.
“Meeting fiscal plans will remain challenging while nominal growth outcomes disappoint, hence pointing to the need for a new strategy”, said the OECD.
Initially, as bank lending contracted, policymakers of the time vigorously perused “sound money” policies.
Besides to, cutting forecast for Europe’s powerhouse, Germany, from 1.8% to 1.3%.
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Among the largest emerging economies, Brazil was seen as one of the biggest victims of falling commodity prices, with a recession expected to be deeper than feared at -4.0 percent this year.
