São Paulo – The Organisation for Economic Co-operation and Development (OECD) expects only modest growth for the global economy in 2018, of 3.6%, against a 3.3% estimate for this year, according to the report Interim Economic Outlook, made public this Tuesday (7) by the Paris-based multilateral organization. The forecasts brought by the previous report, released in November 2016, have been kept unchanged.
However, the OECD warns that there are challenges facing the growth expectation, such as protectionism, financial vulnerabilities, volatilities due to conflicting interest rates policies and a possible detachment of market appreciation from the real economy.
According to the organization, the expected improvement reflects fiscal and structural policies adopted or to be implemented by the larger economies, especially China, Canada and the United States, and a more expansionary economic policy within the Euro Zone. The OECD says, however, that the European measures could be more ambitious. “Such policies are needed to catalyze private demand to boost global activity and reduce inequalities,” said the organization in a statement.
Even with a a pick-up in growth expected in 2017 and 2018 – in 2016 global GDP (Gross Domestic Product) increased 3%, according to the OECD –, the organization warns that forecasts are still less than ideal and there’s great inequality, which demands actions to encourage inclusive growth.
“Growth is still too weak and its benefits too narrowly focused to make a real difference to those who have been hit hard by the crisis and who are being left behind,” said OECD Secretary-General Angel Gurría. “Now, more than ever, governments need to take actions that restore people’s confidence while at the same time resisting turning inwards or rolling back many of the advances that have been achieved through greater international cooperation,” he added.
For Brazil, the OECD expects zero growth this year, the same forecast made in November. For 2018, it expects the country to grow 1.5%, that is, 0.3 percentage point above the November estimate. Also this Tuesday, the Brazilian Institute of Geography and Statistics (IBGE) reported that the Brazilian GDP declined 3.6% in 2016. The OECD believes that the price increase of commodities and the decline of the inflation rate are helping Brazil and Russia to get out of deep recessions.
“The pick-up in growth from countries taking fiscal initiatives is broadly welcome, but we cannot ignore the danger that the recovery gets knocked off track by policy errors or financial risks and vulnerabilities,” said OECD Chief Economist Catherine L. Mann, according to the statement. “Coherent and committed policy action is needed to simultaneously raise growth rates and improve inclusiveness,” she added.
*Translated by Sérgio Kakitani
