GENEVA – The Organization for Economic Cooperation and Development reiterated Tuesday its projection of 2017 global economic growth of 3.3 percent, with consumption, investment and trade lacking strength.
But the OECD lifted its outlook for the world’s three largest economies — forecasting the Japanese economy to grow further due to increased industrial production and exports, and the United States and China because of fiscal support.
The global economy is expected to grow 3.3 percent in 2017 and to expand 3.6 percent in 2018, both unchanged from its projections in November, according to the OECD’s interim economic outlook report.
“Overall, the recent improvement in activity is in line with the modest pick-up in global growth projected in November,” the report said, adding that greater political commitment to structural reform is needed to ensure a durable exit from “the low-growth trap.”
The Paris-based organization warned that potential market volatility, financial vulnerabilities and policy uncertainties could derail the modest economic recovery.
Helped by the yen’s depreciation, the Japanese economy — the world’s third largest — is now projected to grow 1.2 percent in 2017, up from 1.0 percent projected in November. It will likely expand 0.8 percent in 2018, unchanged from the previous estimate.
Japan’s economy has been benefiting from growing exports but private consumption remains weak, revealing the fragility of its economic recovery. The OECD said growth prospects depend on the pace of future wage growth.
The yen has weakened against the dollar amid hopes for U.S. economic growth under President Donald Trump, who has vowed to boost infrastructure spending and carry out tax cuts. His protectionist stance on trade, however, has raised uncertainty around the globe.
Citing anticipated fiscal expansion, the OECD now expects the U.S. economy — the world’s largest — to grow 2.4 percent in 2017, up from 2.3 percent projected previously. But the forecast for 2018 was cut to 2.8 percent from 3.0 percent.
“Policy choices, including on the composition of fiscal spending, taxation, regulation and trade, are likely to have a significant impact on growth outcomes,” the report said.
The OECD revised upward China’s growth forecasts for both 2017 and 2018. The world’s second-largest economy will likely expand 6.5 percent this year, up from 6.4 percent forecast earlier, and by 6.3 percent in 2018, up from 6.1 percent.
Even as uncertainty remains over Britain’s exist from the European Union, the OECD raised its forecast for the United Kingdom, which is now projected to expand 1.6 percent in 2017, up from 1.2 percent. A 1.6 percent expansion is expected for the eurozone economy, unchanged from the November outlook.
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