São Paulo – The Organisation for Economic Co-operation and Development (OCDE) believes that global economy will grow less this year in comparison to 2015 and that an only modest acceleration will take place in 2017. According to the multilateral organization based in Paris, the growth forecast for 2016 is 2.9%, against last year’s 3.1%, and of 3.2% in 2017. The data is part of the report Interim Economic Outlook released this Wednesday (21) by the organization. <\/p>\n
Forecasts for this year and the next were both revised downward in 0.1 percentage point in comparison to similar study done in June. According to the most recent one, global economy is stuck in a “low-growth trap” in that the bleak outlooks drive down trade, investments, productivity and wages even more.<\/p>\n
OECD says that in the last couple of years the growth average of global trade has fallen by half in comparison to the period before the financial crisis that broke out in 2008, with an even sharper decline in the last few quarters due to the deceleration of Asian economies. This is one of the main reasons behind the weak growth registered by the global Gross Domestic Product (GDP). <\/p>\n
According to the organization, there was a reversal in the development of global value chains and no progress in the opening of international markets to trade, which also caused trade deceleration.<\/p>\n
Other reasons, according to OECD, are distortions in the financial markets with exceptionally low – and in some cases negative – interest rates that increase risks across the financial system. This is not, however, the case of Brazil, where the benchmark interest rates continues to be high.<\/p>\n
OECD says that there’s a disconnect between the rise in the price of bonds and equities and the decline in profits and growth forecasts in general, in addition to the over-heating real estate markets in several countries, which increase the vulnerabilities of investors in the case of a sudden “correction” in the price of these assets.<\/p>\n
“While weak demand is surely playing a role in the trade slowdown, a lack of political support for the trade policies whose benefits could be widely shared is of deep concern”, said OECD chief economist Catherine Mann in a statement. “Monetary policy is becoming over-burdened. Countries must implement fiscal and structural policy actions to reduce the over-reliance on central banks and ensure opportunity and prosperity for future generations”, she added.<\/p>\n
Forecasts being revised down in comparison to June’s data reflect downgrades in major developed economies, especially the United Kingdom due to Brexit, which was in part offset by a gradual improvement in some commodity producers developing countries. <\/p>\n
In this regard, OECD revised upward its forecasts on Brazil’s economy. It’s expecting a decline of 3.3% this year, a positive variation of 1 percentage point over June’s report, and a contraction of 0.3% in 2017, an improvement of 1.4 percentage point in comparison to the previous estimate.<\/p>\n
OECD calls for a collective response to weak growth with the approval of fiscal, structural and commercial policies, such as the elimination of protectionist barriers and other obstacles to trade and investments.<\/p>\n
*Translated by Sérgio Kakitani<\/strong><\/p>\n