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The OECD yesterday said that the world’s economy is trapped in a weak growth environment and vulnerable to falling into another deep downturn unless governments take urgent action. Soft demand has discouraged investment and lead to a downgrade in global growth rates.
The OECD chief economist Catherine Mann yesterday said ‘The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops.’
On a positive note, the OECD increased its growth forecasts for the Eurozone based on a stronger than expected first quarter.
Global Growth – downgraded
The organization lowered its growth forecast for the combined economy of the 34 OECD countries to 1.8% this year and 2.1% in 2017 from 2.2% and 2.3% respectively in November.
US Growth – downgraded
The OECD now expects the U.S. economy to grow 1.8% this year and 2.2% in 2017, instead of 2% and 2.2% as it forecast in February and 2.5% and 2.4% in November.
Eurozone Growth – upgraded
The OECD increased its growth forecast for the eurozone this year to 1.6% from 1.3% in February after a stronger than expected first quarter. But it kept its 2017 eurozone forecast at 1.7%.
Japan Growth – downgraded
The OECD trimmed its Japan growth forecast to 0.7% this year and 0.4% in 2017 from 0.8% and 0.6% in February.
Brexit
The OECD singled out the possibility of the U.K. voting to leave the EU in the June 23 referendum as a “major downside risk” that could have substantial consequences for the country, the EU, and the rest of the world. If the U.K. voted to exit the EU, it would hurt economic growth and send shocks through global financial markets.
Threats to global growth
Solutions to increase growth forecasts
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