OECD calls for urgent policy actions while revising growth forecast

Organization of Economic Cooperation and Development (OECD), a Paris based think tank of global economics and policies has called for urgent actions from global policymakers to boost growth. In its latest review, the organization has downgraded its global GDP forecast as well as for some major and emerging market economies.

According to the report, global trade and investments are weak. Couple with sluggish demand, they are dragging employment and wages across economies. It has downgraded its global GDP forecast to 3% for 2016, from previous 3.3%, announced in November last year. According to the report, global economy grew by 3% in 2015, slowest pace in at least five years. It has also revised its 2017 forecast by similar amount to 3.3%.

This interim report in February, saw significant reduction in GDP growth projections across economies.

• OECD axed US growth forecast by 0.5% to 2% for 2016.
• Euro Zone growth forecast got revised to 1.4%, by 0.4%.
• Germany suffered most, with -0.5% reduction in expectation to 1.3%.
• UK growth was revised lower by -0.3% to 2.1%.
• Japan, suffered -0.2% revision to 0.8%
• Among the BRICS, Brazil saw biggest revision, by 2.8% and now economy is forecasted to contract by 4% in 2016.
• India on the other hand saw its GDP forecast revised up by 0.1% to 7.4% and China suffered no correction. GDP is expected to grow by 6.5% in 2016 and 6.2% in 2017 in China.

OECD voiced actions from fiscal side of the economy and joint policy response as monetary policy alone, not sufficient to boost growth.

Despite the organization and its forecast being well respected, policy response unlikely.