The Paris-based think tank said that trade this year was on course to expand at levels often “associated with global recession” as it lowered its forecasts for global growth to 2.9 per cent this year and 3.3 per cent next year, from 3 per cent and 3.6 per cent at its update in September. “Global growth prospects have clouded this year,” it said.
The downbeat outlook sent another jolt through markets after the International Monetary Fund predicted last week that the global economy would grow at its slowest rate since the financial crisis. Wall Street sank by more than 1 per cent and blue-chip stocks in London closed 0.92 per cent lower, reports The Times. The Dow Jones industrial average was off by 200 points at 17,705 in afternoon trading and the FTSE 100 was 58.67 points down at 6,295.16. Continental shares also traded lower.
China and emerging markets were again in the spotlight, as the OECD predicted that the world’s second-largest economy would miss its 7 per cent growth target, managing only 6.8 per cent this year and then slowing to 6.5 per cent and 6.2 per cent in the next two years.
“World trade has been a bellwether for global output,” Catherine Mann, chief economist at the OECD, said. “The growth rates of global trade observed so far in 2015 have, in the past, been associated with global recession . . . This is deeply concerning.”
The think tank said that global trade would grow by only 2 per cent this year, a level to which it has fallen only five times in the past five decades — and all those coincided with downturns.
The OECD based its pick-up in global growth for next year — and to 3.6 per cent in 2017 — on the prospect of stimulus measures in China. “Policy actions are already being implemented [there] that will help to address the weak underlying trends,” Ms Mann said.
Despite the slowdown in developing markets, the OECD said that the US Federal Reserve should press ahead with its first interest rate rise since 2006 — expected next month. It forecast that the American economy would expand by 2.4 per cent this year and by 2.5 per cent next year.
Forecasts for Britain were little changed at 2.4 per cent this year and next, making Britain the equal-fastest-growing G7 economy this year and the second-fastest next year.
