Cheap oil, money lift global growth outlook
Print Edition
CHEAP oil and money have lifted the eurozone out of lethargy, the OECD said yesterday, but it warned investment was lacking to achieve rapid world growth and expressed concerns about China.
“Growth prospects in the major economies look slightly better” than when it made its previous forecasts in November, the OECD said.
The Organization for Economic Cooperation and Development raised its forecast for global growth this year by a tenth of a percentage point to 4 percent and its outlook for 2016 by two-tenths of a percentage point to 4.3 percent.
Nevertheless, the OECD noted that “the near-term outlook remains for moderate, rather than rapid, world GDP growth,” pointing out that “real investment remains sluggish, and labor is not yet fully engaged.”
The OECD, a policy analysis body made up of 34 countries with advanced economies, said the effects of “lower oil prices and the effects of monetary policy easing are driving the overall improvement in the outlook.”
Nowhere was this more evident than in the eurozone, where the OECD raised its 2015 growth forecast by 0.3 percentage points to 1.4 percent this year and by the same magnitude to 2 percent in 2016.
The European Central Bank’s launching of a 1.14-billion-euro (US$1.2 billion) bond buying program this month was the main reason for the improvement in the outlook in the eurozone, it said.
The OECD noted that monetary conditions have been eased in recent months in countries accounting for roughly half of the global economy, which it said has helped improve financial conditions.
With the Federal Reserve meeting yesterday and economists on the lookout for signals that it could begin raising interest rates within months, the OECD said it should wait.
“Lower oil prices and the appreciation of the dollar make it appropriate for the Federal Reserve to wait longer to raise policy interest rates,” said the OECD.
The dollar has been quickly rising in value as the Fed nears raising interest rates and the ECB has eased monetary policy, which could slow US exports and growth.
The OECD held its forecasts for US growth steady at 3.1 percent this year and 3 percent in 2016.
Meanwhile growth is “getting back on track” in Japan, said the OECD, which lifted its 2015 forecast by 0.2 points to 1 percent growth and the 2016 outlook by 0.4 points to 1.4 percent.
While lower fuel prices mean it will take longer to return to safe inflation levels, it will support demand, said the OECD as it saw higher wages as being key to a sustainable recovery.
“A key requirement for reaching a new equilibrium with satisfactory demand growth and inflation close to the official target is a significant rise in average nominal wages, making the upcoming annual wage bargaining round a critical period,” said the OECD, which also urged further structural reforms.
The OECD said China’s growth is slowing to the government’s target of 7 percent, as it trimmed its forecast by 0.1 point to that level while the 2016 outlook was left untouched.
“Policy-makers face a significant challenge between meeting growth targets while also pursuing the stated goal of rebalancing the economy toward domestic demand and at the same time ensuring that financial risks are managed,” it warned.
The OECD now expects India to overtake China as the fastest growing major economy, hiking its forecast by 1.7 points to 7.7 percent growth in 2015, although part of the change was due to new data. The 2016 forecast was raised to 8 percent.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
