Published: Fri, June 01, 2018
Markets | By Otis Pena

NZ economy forecast set to outpace most of OECD


OECD Secretary-General Angel Gurria said the current recovery is still being supported by very accommodative monetary policy, and increasingly by fiscal easing, suggesting that strong, self-sustaining growth has not yet been attained.

The Organisation for Economic Cooperation and Development (OECD) revised higher the UK GDP forecast but warned the brexit related uncertainties could play a spoilsport. The consumers price index is seen running at 2.1 percent in 2019, from 1.7 percent in 2018.

According to the OECD report, however, Chile needs to continue with reforms to drive investment and productivity in order to maintain high growth over the medium term.

In the latest Economic Outlook, the Paris-based think tank said the global economy is set to grow 3.8 percent this year and 3.9 percent in 2019.

The OECD downgraded its growth forecast for Japan by 0.5 points to 1.2 percent.

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The country's economic growth was solid in 2017, underpinned by consumption and tourism.

The Reserve Bank was expected to lift interest rates next year to slow rising inflation pressures from capacity constraints and higher import prices.

"We can say that fiscal policy is the new game in town, three quarters of OECD countries are now undertaking fiscal easing.(that) will have important repercussions for the world economy".

Nevertheless, oil prices, which have risen sharply in recent months, and worldwide trade, facing threats of higher barriers, pose risks to the outlook, the OECD reported. "After monetary and fiscal policies have done their jobs, it's time for reforms to sustain the expansion, to improve well-being and to make growth work for all", he added.

The biggest risk to the economy is a sharp downturn in the housing market as household debt was at record levels relative to income, the OECD said.

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