OECD eyes growth in member countries

In its latest Economic Outlook report, the Paris-based organization said that gross domestic product (GDP) for Asia’s fourth-largest economy will likely grow 2.7 percent this year, down from its previous estimate of 3 percent announced in June.

Stagnation in emerging markets such as China prompted the OECD to lower its 2015 growth forecast for the second time in three months, from 3.0 percent in September to 2.9 percent.

The OECD has repeatedly cut its 2015 growth outlook from the 3.7% it initially forecast last November.

However aspects of Chinese stimulus policy and other factors are leading the OECD to forecast a better 2016 for growth, even though these figures are also revised down from earlier estimates.

Ms Mann highlighted that there had been just five years in the past 50 in which global trade grew by 2pc or less.

“The economy was hit by two shocks in 2015 – an outbreak of the Middle East Respiratory Syndrome (MERS) and a marked slowdown in demand from China and other Asian countries – that reduced output growth to around 2 percent”, the OECD said.

“Robust trade and investment and stronger global growth should go hand in hand”.

In its latest twice-yearly Economic Outlook, the OECD projected a gradual strengthening of global growth in 2016 and 2017 to 3.3 percent and 3.6 percent, respectively, but said any pick-up would require a smooth rebalancing of activity in China and more investment in advanced economies. The pace of growth was projected to slow to 0.5 percent in 2017. “The current account deficit is widening as machinery imports increase, but is largely financed by rising foreign direct investment inflows”, the report said. Yet Brazil’s economy is now seen shrinking 3.1% this year and 1.2% next, compared with contractions of 2.8% and 0.7% predicted in September. Trade growth was expected to reach just 2pc this year, with China’s slowdown “at the heart” of subdued forecasts.

However, the OECD expects Chinese authorities will still miss their economic targets, with GDP growth forecast to cool to 6.2% in 2017. Developed economies are feeling the brunt in the form of reduced demand for both commodities and manufactured goods.

The world needs more of those, says the Organization for Economic Co-operation and Development.

While growth in the eurozone remained lackluster, the OECD said it was expected to strengthen in the years ahead.

Worldwide trade growth is forecast at 2% this year, down from 3.4% in 2014.

“By 2017 – ten years after the onset of the crisis – we still would not have achieved the global rate of growth enjoyed before the crisis”, he said.

The OECD sounded a warning note about the continuing strength of the housing market, cautioning it could lead to a shortage of rental properties and “boost household indebtedness, creating financial stability risks”.

“Past reforms have put the structural unemployment rate on a downward trend, although the recent decision to lift the minimum wage could work in the opposite direction”, it said.