According to the latest OECD Interim Economic Outlook, the weak progress in trade and distortions in the financial system exacerbate the sluggishness of global economic growth.
Growth in the eurozone is expected to reach 1.5% in 2016 and 1.4% in 2017. In France, it is expected to be 1.3% in 2016 and 1.5% in 2017. In Germany, it is expected to be 1.8% in 2016 and 1.5% in 2017.
In the United States, where strong growth in consumption and employment is offset by weak investment, growth is estimated to be 1.4% this year and 2.1% in 2017.
In the United Kingdom, growth has slowed since the decision by the British to leave the EU in the June 23 referendum. Under these conditions, UK growth is expected to be 1.8% in 2016 and 1% in 2017, a rate well below those of recent years.
The global economy is expected to grow more slowly than in 2015, with only a slight acceleration expected in 2017. In its Outlook, the OECD warns that the world is trapped in low growth, with disappointing growth expectations further hindering trade, investment, productivity, and wages.
In recent years, the growth rate of global trade has halved compared to the pre-crisis period and has further declined in recent quarters, with weak trade progress concentrated in Asia.
While the low level of investment has played a role, the rebalancing underway in China and the reversal in the development of global value chains could initiate a permanent slowdown in trade growth, impacting productivity gains.
Insufficient progress—or even regression—in opening global markets to trade has amplified this slowdown.
Exceptionally low—or even negative—interest rates distort the functioning of capital markets and increase system-wide financial risks. The disconnection between the rise in bond and stock prices and the deterioration in profit and growth expectations, combined with overheating real estate markets in many countries, heightens investor vulnerability in the event of a sharp asset price correction.
According to OECD forecasts, global economic growth will be 2.9% this year and 3.2% in 2017, a rate well below long-term averages, which are around 3¾ percent.
The slight downward revision in global outlook since the last OECD Economic Outlook in June 2016 is explained by the deterioration of forecasts for 2017 concerning major advanced economies—notably the United Kingdom—offset by the gradual improvement of activity in key emerging market commodity producers.
