OECD Sees Global Growth Hitting 7-Year High
The global growth story continues. The Organization for Economic Cooperation and Development (OECD) is reporting that the global economy is on pace to have the best year of growth since 2010, which was the snapback year after the Great Recession. Leading the charge has been stronger growth out of the United States and the eurozone. The OECD’s newest installment of its Economic Outlook sees the global economy strengthening. That being said, the OECD says that further policy actions are needed to boost the private sector for stronger and more inclusive growth.
Economic growth figures are in local terms measuring gross domestic product (GDP).
For the United States, the OECD now forecasts that growth will be 2.2% in 2017. That is expected to rise to 2.5% in 2018 and then drop back to 2.1% growth in 2019. For whatever this is worth, that U.S. growth forecast is well under the 3.0% target that the Trump administration has targeted for lower taxes and lower regulatory burdens.
Catherine Mann, chief economist of the OECD, said of the November outlook:
The global economy is flying low and at risk of financial turbulence. The only strategy is to pursue an integrated policy approach that will balance actions to boost growth, mitigate risks in the financial sector and improve resilience. We cannot afford to be complacent and assume that today’s economy is as good as it gets – future generations have a right to ask for better.
The euro area is projected to grow by 2.4% in 2017 and by 2.1% in 2018. The OECD is calling for growth to back down to 1.9% in 2019. The revised projections have been shown to reflect stronger than expected performance in the first half of 2017 for rising employment, accommodative monetary policy and stronger consumption growth. European growth was forecast by nation as follows:
- Germany: 2.5% in 2017, 2.3% in 2018 and 1.9% in 2019.
- France: 1.8% over the 2017 to 2018 period, to drop to 1.7% in 2019.
- Italy: 1.6% growth in 2017, falling to 1.5% in 2018 and 1.3% in 2019.
Growth in the United Kingdom is expected to continue slowing through 2018, due to continuing uncertainty around Brexit and the impact of higher inflation on household purchasing power. The U.K. is projected to grow by 1.5% in 2017, and growth is expected to drop down to 1.2% in 2018 and 1.1% in 2019.
Growth in Japan is a tad lower for 2017, with the new OECD forecast at 1.5% in 2017. That growth in Japan is expected to remain close to 1% in both 2018 and 2019, with the OECD saying that fiscal consolidation resumes and the decline in the working-age population accelerates.
Canada is another bright spot, with the OECD now forecasting 3% GDP growth in 2017. That being said, it projects Canada’s growth will slow to 2.1% in 2018 and 1.9% in 2019 as the local policy stimulus is withdrawn.
Expansion in the major emerging market economies is expected to keep improving. The OECD cited renewed infrastructure investment in China and recovery from recession in major commodity-exporting economies, but the OECD did remind that this remains softer than in the past.
For China, growth is projected to be 6.8% in 2017, followed by 6.6% in 2018 and 6.4% in 2019. It was noted that the figures partly reflect the ongoing rebalancing in China’s growth model.
India is projected to have growth of 6.7% in 2017. Unlike other nations, India is forecast to see growth of 7.0% in 2018, then picking up to 7.4% in 2019. The OECD cited that reforms in India are expected to boost investment, productivity and growth.
Russia is seen as rebounding from recession. The OECD sees GDP growing by 1.9% in 2017, 1.9% in 2018 and 1.5% in 2019.
Brazil is expected to exit recession. The OECD has forecast 0.7% growth in 2017, followed by 1.9% in 2018 and rising to 2.3% in 2019.