OECD Raises UK Growth Forecast Citing Forceful BOE Stimulus
- Author: Wendy Palmer Mar 08, 2017,
Mar 08, 2017, 0:42
The think-tank said Canada's economy will be supported this year by export growth, a better market for commodities and government spending initiatives.
In increasing its forecasts for the United Kingdom, the OECD joins the IMF, Bank of England, and European Commission in making the tacit admission of being too pessimistic in initial economic forecasts after the vote.
"These are expected to catalyse private economic activity and push up global demand". Now, more than ever, governments need to take actions that restore people's confidence while at the same time resisting turning inwards or rolling back numerous advances that have been achieved through greater global co-operation'.
In Tuesday's economic outlook, the OECD questions whether advanced economies have put too much stock in keeping interest rates low for an extended period of time.
Indeed, separate from Tuesday's OECD forecast, Statistics Canada reported that Canadian exports rose 0.5 per cent in January, while Canada posted its third monthly trade surplus in a row. The social cost of the crisis and the increased inequalities need to be addressed, to make growth more inclusive and to reduce pressures for protectionism and other populist responses.
But it went on to warn of a series of risks that threatened to destabilise this positive outlook - notably the increasing popularity of protectionist policies, which the OECD said would hurt global growth and threaten jobs dependent on trade.
Many indexes, particularly in the USA, have rallied over the winter to hit record highs. Coherent and committed policy action is needed to simultaneously raise growth rates and improve inclusiveness'. But the forecast for 2018 was cut to 2.8 percent from 3.0 percent. And growth in consumption and investment is still lagging. The OECD said growth prospects depend on the pace of future wage growth.
The weak growth picture comes amid what the OECD describes as a "low-growth trap" for the world economy, which is expected to grow by 3.3 per cent in 2017 before accelerating in 2018.
Two other major emerging economies - Russian Federation and Brazil - are both recovering from deep recessions with the help of higher commodity prices and easing inflation.
In Japan, fiscal easing and improvements to women's labour force participation will help GDP growth pick up this year to 1.2% from 1.0% in 2016.
The organization said fiscal policy should be used to boost demand, especially if coupled with structural reform.