Global growth to remain sluggish as China weighs on prospects
GLOBAL growth will remain below par for the rest of this year and into next year, as stagnating world trade and deteriorating conditions in financial markets weigh on prospects, a global economic think-tank has warned.
The Paris-based Organisation for Economic Cooperation and Development (OECD) suggested it was a mixed bag for the world's advanced economies, with investment continuing to disappoint in the United States and growth in the Eurozone rising at a slower pace than would have been expected given the fall in the price of oil, interest rates and the value of the euro itself.
The global economy, the think said, was characterised by "puzzles and uncertainties", with China centre stage amid questions over a faster than expected slowdown in the world's second largest economy.
OECD chief economist Catherine L Mann said global growth prospects have weakened slightly.
"Emerging economies have vulnerabilities that could be exposed by rising US interest rates and/or a sharper-than-expected slowdown in China, giving rise to financial and economic turbulence that could also exert a significant drag on advanced economies," Ms Mann said.
"Continued policy stimulus is warranted to support global demand, but the mix of policies will differ by country, and choices need to be consistent with financial stability and reviving long-run growth."
In its latest interim economic outlook, the OECD said rising employment and household spending are driving solid growth in the United States, but investment continues to disappoint.
In the Eurozone, growth is improving, but not as fast as would have been expected. And in Japan, while growth is on an improving path, the OECD said tightening labour markets have yet to feed into wage increases that would underpin sustained growth in personal spending.
The report comes just a day after the OECD published its economic survey of Ireland, in which it highlighted the broad-based, robust recovery taking place here but warned vulnerabilities still existed from various quarters, including high public debt and rapidly rising property prices. Ireland will be the fastest growing OECD economy this year.