OECD Cuts Global Economic Forecast

The world’s economic growth is slowing and needs “urgent policy response” to spur healthy expansion, says the Organization for Economic Cooperation and Development.

“Global growth prospects have practically flat-lined,” declares OECD Chief Economist Catherine Mann. The 34-member group, which represents the world’s largest economies, warns in its latest Interim Economic Outlook that monetary policy alone won’t be enough to achieve satisfactory development.

OECD adds that risks of financial instability remain “substantial.” The group points to inadequate wage and employment growth, weak trade and investment and increasing vulnerability of some emerging economies to high domestic debt and volatile capital flows.

The world’s economy expanded at a five-year low of 3% in 2015 and isn’t likely to improve this year, OECD predicts. In November the group forecast 3.3% global growth for 2016. Now it says that pace won’t be achieved until 2017. The historical average rate has been 3.75%.

OECD predicts sluggish expansion in 2016 and 2017 for the U.S. (2% and 2.2%), Japan (0.8% and 0.6%) and the eurozone (1.4% and 1.7%). It says Brazil will contract 4% this year before beginning a mild revival in 2017.

China’s expansion will slow from 6.5% this year to 6.2% in 2017, the group forecasts. It says India’s economy will grow 7.4% in 2016 and 7.3% in the following year.