Protectionism threatens global growth, OECD warns
- Author: Ronnie Bowen Mar 08, 2017,
Mar 08, 2017, 0:39
OECD Chief Economist Catherine L. Mann said: 'The pick-up in growth from countries taking fiscal initiatives is broadly welcome, but we can not ignore the danger that the recovery gets knocked off track by policy errors or financial risks and vulnerabilities.
In its latest Economic Outlook the OECD projects growth of 1.6 per cent this year for the United Kingdom, up from the 1.2 per cent it forecast in November.
The Paris-based Organization for Economic Cooperation and Development increased its 2017 growth projection to 1.6 percent from 1.2 percent, citing the success of Bank of England stimulus and an easing of fiscal austerity in the wake of the Brexit vote.
In November, faced with the acceleration of the United Kingdom economy on the back of continued strength in consumer spending, the OECD changed its prediction to 1.2 per cent. This improvement largely reflects the combined effects of fiscal and structural initiatives in major economies, notably China, Canada and the USA, together with a more expansionary stance in the euro area, the OECD said.
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. 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'.
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"Efforts are needed to strengthen domestic policies that support trade openness, maximize the gains from trade and ensure that the benefits are fairly shared, with obstacles to the process of reallocation and transition for workers reduced", the OECD said.
In Japan, fiscal easing was seen underpinning growth of 1.2 per cent though the rate was seen falling back to 0.8 per cent in 2018. China's growth is projected to slip - to 6.5% in 2017 and 6.3% in 2018, down from 6.7% previous year.
Its biggest adjustment was for Britain, where it revised expected GDP growth in 2017 upwards from 1.2 to 1.6%, but stuck with a forecast of 1.0% growth in 2018. "The positive assessment reflected in market valuations appears disconnected from real economy prospects", the OECD said.
The organisation says in the report released in Paris on Tuesday while confidence has improved, consumption, investment, trade and productivity are "far from strong".
Higher commodity prices and easing inflation are supporting a recovery from deep recessions in Brazil and Russian Federation. The forecast for 2018 remains unchanged at 1%.