OECD economic outlook upgrades global growth forecast, but United Kingdom still lags

Prospects for UK exports have improved according to the latest update in economic outlooks from the OECD
Credit
Jason Alden  Bloomberg

Prospects for UK exports have improved according to the latest update in economic outlooks from the OECD Credit Jason Alden Bloomberg

The global economy is projected to grow by 3.5% this year and 3.7% in 2018 and the growth of major advanced economies remains on track.

Economists at ANZ are now expecting two rate rises in 2018, which would lift the cash rate to 2.0 per cent from its present record low of 1.5 per cent.

It maintained its Canadian outlook for 2018 at 2.3 per cent.

Also unchanged was the OECD's forecast for British economic growth to slow to 1.6 percent this year and 1.0 percent next year.

It kept its growth forecast for the United States this year unchanged at 2.1 percent, as it did for next year at 2.4 percent.

Global growth momentum has improved and is more broad-based now, yet a self-sustained recovery is far from secured as inflation remains subdued and there exists an unmet need for structural reforms, the Organization for Economic Cooperation and Development said Wednesday.

He said Australia has become a bit of a laggard in the world economy having been a leader during the 2008-2009 global financial crisis.

The economist also stressed that structural efforts must be intensified to bolster the nascent investment recovery, to address slow productivity growth and to ensure the recovery yields benefits for all.

The revised projections reflect stronger-than-expected performance in the first half of 2017, in the context of rising employment rates, accommodative monetary policy and reduced political uncertainty. That's 0.3 percentage point more than its previous prediction in June and means the region will match the expected growth rate of the USA, which was left unchanged. Global growth was 3.1% in 2016.

The Canadian economy has consistently beat analysts' expectations this year, most recently by recording growth of 4.5 per cent between April and June this year, which was far above the consensus forecast of 3.7 per cent. Its June forecast noted the economy was gaining steam, propelled by government spending on infrastructure, social housing, education and innovation, as well as rising household wealth and rebounding business investment, particularly in the resource sector. Canada's central bank raised rates twice this summer, for a compound increase of 0.5 percentage points, from 0.5 per cent to 1 per cent.

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