Published: Fri, November 22, 2019
Markets | By Otis Pena

OECD warns global growth `weakest since financial crisis`

OECD warns global growth `weakest since financial crisis`

Presenting the Outlook in Paris OECD Chief Economist Laurence Boone said: "It would be a mistake to consider these changes as temporary factors that can be addressed with monetary or fiscal policy: they are structural".

They also made an initial prediction for 2021, saying the global economy will grow 3 percent.

The OECD sees global growth stuck at 2.9% this year and next, and rising slightly to 3% in 2021.

Without clear policy direction on these issues, 'uncertainty will continue to loom high, damaging growth prospects, ' she added.

"A slow recovery of exports and business investment is expected towards the end of 2021 as worldwide trade expands more rapidly", the organization said, adding that the main upside risk stems from a faster recovery of business sentiment and business investment growth. The situation remains inherently fragile, and structural challenges - digitalisation, trade, climate change, persistent inequalities - are daunting.

In China, the second biggest economy worldwide, growth was forecast to "continue to edge down, to around 5.5 percent by 2021", Boone said.

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China, which is not an OECD member but is tracked by it, was forecast to grow marginally faster in 2019 than had been expected in September, with growth of 6.2 per cent rather than 6.1 per cent.

However, the OECD said China would keep losing momentum, with growth of 5.7 percent expected in 2020 and 5.5 percent in 2021 in the face of trade tensions and a gradual rebalancing of activity away from exports to the domestic economy. It is seen at 1.2 percent in 2021. The OECD expects US economic growth to slow to 2% next year and in 2021, from 2.3% this year.

The pain of negative interest rates for banks will only get worse as long as the European Central Bank maintains its asset-purchase program, the Organization of Economic Co-operation and Development warned on Thursday.

Meanwhile, the UK's economic progress was forecast to remain sluggish, with GDP growth of 1.0% predicted for the next two years even under the assumption that a smooth exit from the European Union will be achieved.

United States growth is trimmed back to 2.3% from 2.4% for 2019 and kept the same at 2.0% for 2020, while China's growth is upgraded to 6.2% from 6.1% this year and left unchanged at 5.7% for next year.

Ms. Boone said the new funds could be modeled on the U.S. Defense Advanced Research Projects Agency, which she said had helped to spur innovation in privately owned businesses without closing down competition, and provided a template for good governance.

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