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Slowdown in emerging economies impacts global growth

A further sharp downturn in emerging market economies and world trade has weakened global growth to around 2.9 per cent this year – well below the long-run average – and is a source of uncertainty for near-term prospects, says the OECD, the organisation of Economic Cooperation and Development.

In its latest twice-yearly, the OECD projects a gradual strengthening of global growth in 2016 and 2017 to an annual 3.3 per cent and 3.6 per cent respectively. But a clear pick-up in activity requires a smooth rebalancing of activity in China and more robust investment in advanced economies. Emerging market challenges, weak trade and concerns about potential output suggest higher downside risks and vulnerabilities compared with the OECD’s June Outlook.

Presenting the outlook in Paris on November 9, 2015, OECD Secretary-General Angel Gurría said, “The slowdown in global trade and the continuing weakness in investment are deeply concerning. Robust trade and investment and stronger global growth should go hand in hand. G-20 leaders meeting in Antalya need to renew their efforts to secure strong, sustainable and balanced growth.

” The outlook calls for greater ambition by OECD and G20 countries in supporting demand and pursuing structural reforms to boost potential growth and ensure that its economic benefits are shared by all. It calls for policies to support short-term demand, including on-going monetary and fiscal policy support in accordance with countries’ policy space. Collective action to increase public investment is essential and would increase growth without increasing debt-to-GDP ratios.

www.oecd.org

 
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