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Weak growth plagues global economy, OECD

dpadpa 21/09/2016

Weak growth in trade and the distorting effects of monetary policy on financial markets is weighing on global economic growth, says the OECD.

The global economy is continuing to drag due to weak growth in trade and the distorting effects of monetary policy on financial markets, the Organization for Economic Cooperation and Development (OECD) says.

In its interim economic report out on Wednesday, the Paris-based think tank revised its growth projections slightly downward from the last forecasts issued in June.

For both 2016 and 2017, the OECD revised its growth forecast downward by 0.1 percentage points.

The revisions bring expected world economy growth down to 2.9 per cent in 2016, which would be lower than last year's growth rate of 3.1 per cent, and 3.2 per cent in 2017.

While the newest figures revise 2016 growth for the US and Canada most drastically downward - by 0.4 and 0.5 percentage points respectively - the projected growth rate for Germany improved by 0.2 percentage points in the latest forecast.

In Europe, Britain is projected to have the lowest growth rate in 2017 after Italy, since its forecast was revised downward by one percentage point from the last report.

Despite OECD's warnings over the economic fallout from the British decision to exit the Eurozone, the latest report applauded efforts by the British central bank to limit instability.

Nevertheless, the OECD said the global economy remains in a "low growth trap" partially exacerbated by monetary policy that distorts financial markets by keeping interest rates exceptionally low.

"Monetary policy is becoming over-burdened. Countries must implement fiscal and structural policy actions to reduce the over-reliance on central banks and ensure opportunity and prosperity for future generations," said OECD chief economist Catherine Mann.

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