OECD cuts global growth forecast in 2019 on fragile European economies, weak trade
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E-mail Xinhua, March 7, 2019
Expected weak economic performance, notably in the eurozone, coupled with persistent risks of protectionism, would weigh on global growth this year and in 2020, the Organization for Economic Cooperation and Development (OECD) said on Wednesday.
The OECD said in its interim economic outlook that the global economic growth is projected to be 3.3 percent in 2019 and 3.4 percent in 2020. The latest forecasts represented downward revisions by 0.2 and 0.1 percentage points respectively from a previous report released in November 2018.
"Economic prospects are now weaker in nearly all G20 countries than previously anticipated," the OECD said, referring to the Group of 20 economies.
The OECD cited challenges such as slower growth in major economies, a slowdown in trade and global manufacturing, high policy uncertainty and risks in the financial markets.
"The global economy is facing increasingly serious headwinds. A sharper slowdown in any of the major regions could derail activity worldwide, especially if it spills over to financial markets," said OECD Chief Economist Laurence Boone.
"Governments should intensify multilateral dialogue to limit risks and coordinate policy actions to avoid a further downturn," she added.
For the euro area, the uncertainty over Brexit would hit businesses and impact economic growth. Germany and Italy could witness particularly significant slowdown. The OECD had more than halved its 2019 GDP growth forecast to 0.7 percent from 1.6 percent previously. It predicted a slight recovery to 1.1 percent growth for 2020.
It saw signs of even weaker growth in Italy in 2019, projecting a contraction of 0.2 percent, before a slight recovery next year.
The OECD also projected a deceleration in U.S. growth to 2.6 percent this year from a previous estimate of 2.7 percent mainly due to the impact of re-imposed tariffs.
The OECD called on central banks to remain supportive, though it stressed that monetary policy alone cannot resolve the downturn in Europe or improve the modest medium-term growth prospects.
"A new coordinated fiscal stimulus in low-debt European countries, together with renewed structural reforms in all euro area countries would add momentum to a growth rebound, boost productivity and spur wage growth over the medium term," it said.
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