More optimistic, OECD revises high-growth eurozone economy to 1.2% this year – The Economic Journal

More optimistic, OECD revises high-growth eurozone economy to 1.2% this year - The Economic Journal


The Organization for Economic Co-operation and Development (OECD) has revised down slightly the growth of the world economy to 3.2% this year, one tenth less than in March. The institution led by Ángel Gurría is, however, more optimistic about the performance of the euro zone economy and now sees GDP expanding 1.2%, plus two tenths of that in the last report.

In the "Economic Outlook" released on Tuesday, the OECD maintains next year's global growth estimate at 3.4% and revises the euro zone's rise to 1.4% when in the previous report it estimated 1.2 %.

"Economic growth is expected to remain subdued due to weak external demand and low business confidence, which weighs heavily on private investment," the OECD predicts about the euro zone, adding that "private consumption will support moderate economic activity, supported by a robust labor market, with unemployment declining slightly more and wage growth rising moderately. "

Regarding the global economy, the institution led by Ángel Gurría said that "the balance of risks continues to be downward, with growth results potentially being weaker if negative risks materialize or interact."

Identifies as the main risks a prolonged period of high customs duties on trade between the United States and China, the creation of new rates between the United States and the European Union, the policy of stimulating the Chinese economy is not successful, uncertainty around Brexit and the financial vulnerabilities related to high levels of debt and deterioration of credit quality.

"Decisive action by decision-makers to reduce uncertainty around policy and strengthen medium-term growth prospects, including measures that reduce barriers to trade, would increase confidence and investment around the world," stresses established in Paris.

Global trade growth expected to slow to 2.1% this year

The OECD also expects world trade growth to slow to 2.1% this year, but to recover again to 3% by 2020, but still below 3.9% in 2018.

"At this rate, trade intensity will not only remain weak against pre-crisis patterns, but it will be below the average pace achieved in 2012-18," says the institution led by Angel Gurría. While underlining that the slowdown in trade growth will be felt in all economies, it highlights that the main contributions will come from Asia and North America.

Source: OECD



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