OECD upgrades global, Japan growth outlooks for 2018, 2019

Tuesday, 13 Mar, 2018

In its interim economic outlook report issued Tuesday, the organization forecast global economic growth for this year at 3.9 percent, up from its previous suggestion of 3.7 percent.

And while eurozone growth is expected to ease off from 2.5% past year to 2.3% in 2018 and 2.1% in 2019, major continental economies like Germany and France are forecast to out-perform the UK.

The OECD's latest economic outlook showed all but one G20 nation - Russian Federation - was set to grow at a faster pace this year than predicted last November. "Stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based". The figure for next year was also increased from 3.6 percent to 3.9 percent. The Paris-based organization had expected growth to be 1.2 percent in 2018 and 1.0 percent in 2019.

The body's Interim Economic Outlook - released as Chancellor Philip Hammond was preparing to paint a hopeful picture of Britain's prospects in his spring statement - nudges predicted United Kingdom growth for 2018 up by a tenth of a percentage point to 1.3%.

Despite the upward revisions, the OECD said private consumption in Japan could be subdued if wage and income growth are modest.

Globally, the OECD expects a modest increase in inflation amid tightening labor markets, which will reduce dependence on accommodative monetary policy.

The latest round of protectionism was triggered by USA steep tariffs on imported steel and aluminum. "Safeguarding the rules-based global trading system is key".

U.S. President Donald Trump last week formally signed proclamations to impose a 25-percent tariff on imported steel and a 10-percent tariff on aluminum, causing mounting dissent among business groups and trading partners around the world.

The raised forecast was in part due to expectations that US tax cuts would boost the world's biggest economy, it said.

The US economy, by contrast, is seen expanding by 2.9 per cent this year and 2.8 per cent next, helped by the simulative effect of tax cuts. The world's largest economy is expected to grow 2.9 percent this year and 2.8 percent next year.