The Organisation for Economic Co-operation and Development announced on Wednesday that the outlook for the global economy has overall improved better than the past couple of quarters during its bi-annual world economy assessment.
Chief OECD Economist Catherine Mann stated that the overall global economic outlook is better but is a risk of political risks as policymakers may have the tendency
The organization also stated that a global trade recovery and globalization can improve the lives of the people and the economy should countries continue to support those affected by rising competition.
The current outlook was slightly better than the OECD’s previous forecast last November which predicted that this year’s economic growth rate would be at around 3.3%.
According to the OECD, global growth rates is to go up by 3.5% this year and around 3.6% in 2018 coming from yearly low of 3% in 2016 which was the lowest rate since 2009. Overall the OECD described the current global economic outlook as ‘better but not good enough’.
According to Mann, this was due to the lack of improvements in the organization’s individual outlook for
Overall, the global economy is forecasted to rise to a six-year high until 2018.
Despite leaving a bright forecast for the world’s economy, the OECD warned that Britain might drop to the bottom of the wealthiest countries next year due to the ongoing rising inflation along with a weak wage growth.
According to the Paris-based organization, an inflation rate of 2.7% by 2018 would send wage growth smaller and will lead into the United Kingdom having the weakest income performance next to Finland.
The United Kingdom is also expected to face a huge wage decline by 2018 compared to any other advanced economies by that time. Countries like Italy and Mexico are expected to post actual wage increases by next year. The country’s budget deficit is also set to remain the same this year.
The OECD also held its ground on its previous forecasts that the United Kingdom is expected to be affected by a Brexit-caused decline with a growth rate of 1.8% in 2016 down to 1.6% this year and only 1% by next year.
The OECD also gave a negative warning for the economy of the United States despite the bright prospect of Trump’s tax cuts and pro-business policy plans in the near future.
The growth forecast for the US is now down to 2.1% this year and 2.4% next year down from last March’s estimates of 2.4% and 2.8% respectively. The decline was largely believed to have been caused by the delay in Trump’s planned tax cuts and a boost in infrastructure spending.
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