A further sharp downturn in emerging market economies and world trade has weakened global growth to around 2.9 percent this year – well below its long-term average – and is a source of uncertainty for near-term prospects, the Organisation for Economic Co-operation and Development (OECD) said Monday.
In its latest twice-yearly Economic Outlook, the OECD projected a gradual strengthening of global growth in 2016 and 2017 to 3.3 percent and 3.6 percent, respectively, but said any pick-up would require a smooth rebalancing of activity in China and more investment in advanced economies.
In September, the OECD forecast global growth to be 3.0 percent this year, trimming estimates it made in June for 3.1 percent.
Although advanced economies had been resilient so far this year, the OECD said that weak global trade had centered on the emerging markets in 2015 and that China’s slowdown was “at the heart of this.”
“China’s transition from infrastructure investment and manufacturing and towards consumption and services is one important reason for the decline in commodity prices, and may be reducing its role in global value chains as well.”
Economic growth in China is projected by the OECD to slow to 6.8 percent in 2015 and to continue to decline gradually thereafter, reaching 6.2 percent by 2017.The organization said that global trade weakness – which it called “deeply concerning” –-could be a harbinger of slowing global GDP growth.