OECD warns global growth ‘weakest since financial crisis’

Cites govts are failing to get to grips with climate change digitalisation of economies

Cites govts are failing to get to grips with climate change digitalisation of economies

The Organisation for Economic Cooperation and Development (OECD) has warned that risks to the global outlook have increased.

The Paris-based organization warned about the risk of long-term stagnation, blaming trade conflict, weak business investment and persistent political uncertainty. It expanded 3.5 percent in 2018.

"Things are not really moving", said Laurence Boone, the OECD's chief economist.

In 2021, the OECD, which groups the world's wealthiest nations, sees global economic growth edging back up to 3.0 per cent, according to its November 2019 Economic Outlook.

Those remain, but it also flags more systemic challenges from climate change, technology and the fact that the trade war is just part of a bigger shift in the global order.

"Without clear policy direction on these issues, "uncertainty will continue to loom high, damaging growth prospects".

Fiscal policy will remain supportive of growth in the coming two years, driven by higher public sector wages and social transfers, the OECD says.

Boone applauded central banks for making timely monetary decisions that partially offset the damage inflicted by trade disputes, but she said governments have failed to invest enough to address climate change and improve infrastructure.

In addition to the dragging trade conflict between the US and China that the OECD warned could disrupt supply chains and affect jobs and incomes, the organization also pointed to the unpredictable future of the EU-UK trade relationship and high corporate debt as factors that could hurt the global economic outlook.

The OECD lowered its forecast for global economic growth in 2020 to 2.9% from the 3% it expected in September. Private consumption growth outlook was also slashed to 1.8 percent from 2.5 percent in September.

However, the OECD said China would keep losing momentum, with growth of 5.7 percent expected in 2020 and 5.5 percent in 2021 in the face of trade tensions and a gradual rebalancing of activity away from exports to the domestic economy.

In the Euro area, 2019 is expected to close with 1,2% growth, decelerating further to 1,1% in 2020. It is seen at 1.2 per cent in 2021.

The European Central Bank has called on eurozone governments to help it boost flagging growth, but the European Commission on Wednesday said there would be no such stimulus next year if member states stick to their current budget plans.

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