OECD see “synchronised momentum for global economy” – except Brexit-stricken UK

The OECD has published its Interim Economic Outlook showing the world economy is picking up momentum – except for the UK.

The pace of expansion is projected to be faster this year than in 2016, with a further uptick expected in 2018. The US is projected to grow by 2.4 per cent in 2018 and Germany, France, Italy and the general Euro area are also forecast to post strong results.

Conversely, the previously identified growth slowdown in the United Kingdom is expected to continue through 2018, while uncertainty remains over the outcome of negotiations around the decision to leave the European Union.

OECD Chief Economist Catherine L. Mann said: “The short-term outlook is more broad-based and the upturn is promising, but there is no room for complacency.

“Monetary policy should remain accommodative in some economies but with an eye on financial stability so as to remain supportive of further rebalancing towards fiscal and structural initiatives. Structural efforts need to be intensified to bolster the nascent investment recovery, to address slow productivity growth and to ensure the recovery yields benefits for all.”

The euro area is projected to grow at a 2.1 percent rate in 2017 and a 1.9 percent pace in 2018 – upward revisions from previous projections driven by stronger growth in key European countries.

Germany is forecast to grow by 2.2 percent in 2017 and 2.1 percent in 2018, France by 1.7 percent in 2017 and 1.6 percent 2018, while Italy will see a 1.4 percent growth rate this year and a 1.2 percent rate in 2018.

The revised projections reflect stronger-than-expected performance in the first half of 2017, in the context of rising employment rates, accommodative monetary policy and reduced political uncertainty. The upswing is also driven by stronger consumption growth and investment, as well as healthy export growth.

In the United Kingdom, the previously identified growth slowdown is expected to continue through 2018, while uncertainty remains over the outcome of negotiations around the decision to leave the European Union. The unemployment rate has fallen to below 4.5 per cent, but weak productivity and real wage growth persist.

The depreciation of the sterling has modestly improved export prospects but also pushed up inflation. In this environment, the UK is projected to grow by 1.6 percent in 2017 and 1 percent in 2018.

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