OECD Maintains World Growth Outlook But Warns Recovery Is Weak

Reserve Bank assistant governor Luci Ellis

The pace of expansion is projected to be faster this year than in 2016, with a further uptick expected in 2018, but strong, sustainable, and inclusive medium-term growth is not yet secured.

"The Outlook points out that the recovery of business investment and trade remain too low to sustain healthy productivity growth, while wage growth has been disappointing on average, and not equitable across workers", it said. Monetary policy should remain accommodative in some economies but with an eye on financial stability so as to remain supportive of further rebalancing towards fiscal and structural initiatives.

Britain will fall to the bottom of the advanced economy growth league next year as the country is overhauled by Japan, Canada, France, the United States and Italy, according to the Organisation for Economic Co-operation and Development.

"The underlying health of China's economy remains relatively firm", said UBS China economists in a research note.

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Last June, the organization lifted Turkey's growth forecast for the year to 3.4 percent, up from 3.3 percent, while the annual growth rates were 6.1 percent in 2015 and 3.2 percent last year.

And for next year it is forecasting growth of 1.9 percent for the eurozone, 0.1 percentage point more than previously estimated but below the 2.4 percent projection for the U.S. Its June forecast noted the economy was gaining steam, propelled by government spending on infrastructure, social housing, education and innovation, as well as rising household wealth and rebounding business investment, particularly in the resource sector.

The relative slowdown was due to the implementation of a goods and services tax and the sudden withdrawal late previous year of higher denomination banknotes.

In its latest interim economic outlook, released in Paris on Wednesday, the OECD warns the long period of low interest rates has boosted asset price valuations and created financial distortions that will be "testing to resolve". That compared with an earlier outlook for growth of 1.8 per cent in 2017 and 1.8 per cent in 2018. Improvements in wage growth, productivity and regulation in world markets will need to be made, however, if the prediction is to be met, it said.

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