Take advantage of low interest rates and spend - OECD
Published 19/02/2016 | 02:30
Countries should take advantage of record low interest rates to boost public investment, the OECD has said, as it warned global growth prospects have essentially flat-lined.
In its latest economic assessment, the Paris-based Organisation for Economic Cooperation and Development said the world economy this year will grow no faster than 2015, which it said was the weakest since 2010.
The think-tank said achieving strong growth in the global economy remained "elusive, with only a modest recovery in advanced economies and slower activity in emerging markets.
OECD chief economist Catherine Mann said a stronger collective policy approach is urgently needed, focusing on a greater use of fiscal and pro-growth structural policies.
"Global growth prospects have practically flat-lined, recent data have disappointed and indicators point to slower growth in major economies, despite the boost from low oil prices and low interest rates," Ms Mann said.
"With governments in many countries currently able to borrow for long periods at very low interest rates, there is room for fiscal expansion to strengthen demand in a manner consistent with fiscal sustainability.
"The focus should be on policies with strong short-run benefits and that also contribute to long-term growth. A commitment to raising public investment would boost demand and help support future growth."
The Paris-based organisation said the world economy will expand at no faster a pace than it did last year, with trade and investment weak, sluggish demand has created low inflation and inadequate wage and employment growth.
The global economy will grow by 3pc this year, rising to 3.3pc in 2017, which it said is well below long-run averages of around 3.25pc.
"This is also lower than would be expected during a recovery phase for advanced economies," the OECD said.
The agency said the US will grow by 2pc this year and by 2.2pc in 2017, while the UK is projected to grow at 2.1pc in 2016 and 2pc in 2017.
The Eurozone is projected to grow at a 1.4pc rate in 2016 and a 1.7pc pace in 2017.