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Strengthening investment key to improving world economy's B-minus grade: OECD
A new report from the Organization for Economic Co-operation and Development (OECD) says global growth will gradually strengthen to its pre-crisis growth rate by late 2016 as activity becomes more evenly shared across the major economies and overall external imbalances are less marked than in the run-up to 2007
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new report from the Organization for Economic Co-operation and Development (OECD) says global growth will gradually strengthen to its pre-crisis growth rate by late 2016 as activity becomes more evenly shared across the major economies and overall external imbalances are less marked than in the run-up to 2007.
The OECD Economic Outlook released on Wednesday says labor markets are gradually healing in the advanced economies and risks of deflation have receded. However, it says, the global economy can be characterized as only achieving a muddling-through 'B-minus ' grade.
'Global growth in the first quarter of 2015 was weaker than in any quarter since the crisis. And although this softness is seen as transitory, productivity growth continues to disappoint, reflecting in part tepid business investment which has weakened the spread of new technologies,' the Outlook said.
It says weak investment in many economies is hindering an increase in consumption, job creation and wage raises, and eroding the prospects for long-term sustainable growth.
'The global economy is projected to strengthen, but the pace of recovery remains weak and investment has yet to take off,' OECD secretary-general Angel GurrÃa said. 'The failure to trigger strong, sustainable growth has had very real costs in terms of lost jobs, stagnant living standards in advanced economies, less vigorous development in some emerging economies and rising inequality nearly everywhere.'
The Outlook says increases in capital spending are needed to push economies onto a higher growth path. For policy makers, translating investment into sustained growth also requires paying attention to low-wage workers, as well as tackling the consequences of rising inequality in education, a key factor undermining growth in the longer term.
The OECD sees global growth at 3.1 percent in 2015, rising to 3.8 percent in 2016. This is less than the 3.6 percent and 3.9 percent foreseen in the previous Outlook in November 2014, largely on account of the unexpected weakness seen in the first quarter of 2015.
Global growth is expected to pick up through 2015 and 2016 thanks to low oil prices, widespread monetary easing and a reduction in the drag from fiscal consolidation in the major economies. (ebf)(+++)
