OECD trims Korea’s 2019 growth outlook to 2% on weak exports
- by Emilio Sims
- in Money
- — Nov 24, 2019
OECD chief economist Laurence Boone noted that unless investment picks-up that growth will stay "at this very low level".
In 2021, the OECD, which groups the world's wealthiest nations, sees global economic growth edging back up to 3.0 per cent, according to its November 2019 Economic Outlook.
"It would be a mistake to consider these changes as temporary factors that can be addressed with monetary or fiscal policy: they are structural. Without coordination for trade and global taxation, clear policy directions for the energy transition, uncertainty will continue to loom large and damage growth prospects".
However, the OECD said China would keep losing momentum, with growth of 5.7 per cent expected in 2020 and 5.5 per cent in 2021 in the face of trade tensions and a gradual rebalancing of activity away from exports to the domestic economy.
But governments had not done the same, instead failing to invest enough in long-term projects to improve infrastructure, advance digitalisation of their economies or in the fight against climate change.
"In the euro area, banks' payments on excess reserves will gradually increase over time if net monthly asset purchases by the ECB of 20 billion euros (US$22 billion) per month translate proportionally to higher excess reserves", the OECD said in its economic outlook report published Thursday.
In a statement, the OECD said that world GDP growth this year is expected to fall to 2.9%, "its lowest annual rate since the financial crisis", and is expected to hover at that level in 2020 and 2021.
On trade, the OECD said the risk of further escalation of tensions is a "serious concern".
"The situation remains inherently fragile, and structural challenges are daunting", Boone said. That would weigh on business investment growth in major advanced economies, which the OECD expects to slow to about 1.25% a year from close to 2% in 2018.
The European Central Bank has called on eurozone governments to help it boost flagging growth, but the European Commission on Wednesday said there would be no such stimulus next year if member states stick to their current budget plans.
Meanwhile, the UK's economic progress was forecast to remain sluggish, with GDP growth of 1.0% predicted for the next two years even under the assumption that a smooth exit from the European Union will be achieved.
Other emerging-market economies are expected to recover "only modestly", Boone said.
