The global economy is set to grow by 3.5 percent this year and 3.7 percent in 2018 compared to 3 percent last year, while revised projections for the euro area place growth at a 2.1 percent rate (from 1.8 percent in June) in 2017 and up by 1.9 percent next year, according to the OECD’s Interim Economic Outlook.
The OECD (Organisation for Economic Co-operation and Development) cites increasing industrial production and trade as well as a rebound of technology spending for its global forecast, while current revised projections for the EU are driven by stronger growth in key European territories.
Indicatively, major advanced economies are keeping a steady pace with growth in the US estimated at 2.1 percent in 2017 and 2.4 percent in 2018, supported by stronger consumer spending and business investment. Job creation has also remained strong.
In the euro area meanwhile, Germany is set to grow by 2.2 percent in 2017 and 2.1 percent in 2018, France by 1.7 percent in 2017 and 1.6 percent in 2018, and Italy by 1.4 percent this year and 1.2 percent in 2018. Improved growth rates are attributed to stronger-than-expected performance in the first half of 2017, firmer consumption, growth and investment, healthy export growth, rising employment rates, accommodative monetary policy and reduced political uncertainty
The OECD report is at the same time urging further policy action to ensure sustainable and inclusive medium-term growth.
“The short-term outlook is more broad-based and the upturn is promising, but there is no room for complacency,” said OECD chief economist Catherine Mann.
“Monetary policy should remain accommodative in some economies but with an eye on financial stability so as to remain supportive of further rebalancing towards fiscal and structural initiatives. Structural efforts need to be intensified to bolster the nascent investment recovery, to address slow productivity growth and to ensure the recovery yields benefits for all. As fiscal policy has eased in many economies, it is crucial that the fiscal room be used to deliver on growth-enhancing and equity-friendly fiscal measures,” Mann added.