Thinktank forecasts UK will suffer Brexit-related slowdown and says US faces ‘sizeable’ economic risks. The west’s leading economic thinktank has predicted a tentative recovery for the global economy this year and next but warned of risks from fragile trust in government, weak wage growth and persistent inequality.
In its latest health check on growth prospects, the Organisation for Economic Cooperation and Development described the outlook for the global economy almost a decade on from the financial crash as “better, but not good enough”.
The Paris-based organisation nudged up its forecasts for global growth this year. But it trimmed its outlook for the US, to show growth accelerating a little more gently than in its previous assessment made in March.
It made no changes to predictions that the UK will suffer a Brexit-related slowdown, with growth easing from 1.8% in 2016 to 1.6% this year and just 1% in 2018.
After 3% growth in 2016, the global economy is now expected to expand 3.5% this year and 3.6% in 2018. That compares with previous forecasts for 3.3% and 3.6%, respectively.
“After many years of weak recovery, with global growth in 2016 at the lowest rate since 2009, some signs of improvement have begun to appear,” OECD’s chief economist, Catherine Mann, wrote in the new outlook.
“Trade and manufacturing output growth have picked up from a very low level, helped by firmer domestic demand growth in Asia and Europe, and private sector confidence has strengthened. But policy uncertainty remains high, trust in government has diminished, wage growth is still weak, inequality persists, and imbalances and vulnerabilities remain in financial markets.”