OECD forecasts global economic growth of 3.5% in 2017, 3.6% in 2018

OECD forecasts global economic growth of 3.5% in 2017, 3.6% in 2018

OECD forecasts global economic growth of 3.5% in 2017, 3.6% in 2018

In its latest economic outlook, the Organization for Economic and Cooperation Development (OECD) on Wednesday projected accelerated global growth for the 2017-2018 period, saying "greater efforts are needed to ensure that the benefits from growth and globalization are more widely shared".

The OECD also forecasted the global growth rate for 2017 at 3.5 percent; its projection for 2018 was 3.6 percent.

The OECD forecast US growth of 2.1 percent this year and 2.4 percent next year, down from estimates in March of 2.4 percent and 2.8 percent, respectively.

Meanwhile, GDP growth in the eurozone will reach 1.8 per cent in 2017 and 2018, while in the United States growth is forecast at 2.1 and 2.4 per cent respectively.

The improvement would also not be enough to satisfy people's expectations for better standards of living and reduce growing income inequality, he said.

The OECD expects Canada's economic growth rate to subside next year to 2.3 per cent, but that estimate would be at risk if there's a "disorderly" decline in the Toronto and Vancouver housing markets.

OECD chief economist Catherine Mann attributed the downgraded outlook to delays in the Trump administration pushing ahead with planned tax cuts and infrastructure spending.

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"As growth and inflation prospects in core euro area economies improve, there is a risk that monetary policy tightens too rapidly, weighing on the recovery in countries with high unemployment, high public and private debt and large negative output gaps", the report said.

"Economic activity slowed in 2016 against the backdrop of a failed putsch in July and increased geopolitical tensions in the region", the organization said in its economic outlook for June 2017. "Fiscal policy will remain supportive but should prioritize social inclusion more".

"Also, households are expected to continue to support their consumption by further reducing their saving rate".

Those measures include purchases of government bonds that run at EUR60 billion a month, and a negative deposit rate, which means banks pay to hold funds at the central bank.

The OECD also warned that a growing backlash against globalization could trigger protectionist policies and undermine worldwide trade, leading to lower growth.

Dean Popplewell has almost two decades of experience trading currencies and fixed income instruments.

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