International trade group the Organisation for Economic Co-operation and Development is lowering its forecast for global output this year and says the slowdown in worldwide trade and investments is “deeply concerning.”
In its latest bi-annual Economic Outlook, the OECD cut its 2015 worldwide gross domestic product forecast to 2.9% from the 3% it announced in September, due to discouraging trade news from emerging markets, especially the recessions in Brazil and Russia, and the slowdown in China.
Global trade growth for 2015 is expected to reach 2%, leading OECD secretary-general Angel Gurría to note that over the past five decades, there have been only five other years in which trade growth has been 2% or less, and they all coincided with periods of global recession.
“A further sharp slowdown in emerging market economies is weighing on global activity and trade. At the same time, subdued investment and productivity growth is checking the momentum of the recovery in the advanced economies,” he said in a speech in Paris Monday.
The OECD does predict a strengthening of global growth in 2016 and 2017 to an annual 3.3% and 3.6% respectively. But the group emphasized that this would require a rebalancing of the Chinese economy, which it sees undergoing a fundamental structural shift from manufacturing-driven growth toward consumption and services. Achieving this while still maintaining a healthy GDP growth “presents significant challenges,” said the OECD.
The OECD forecast GDP expansion of 2.5% in the U.S. next year and 2.4% in 2017, thanks to household demand for goods and services. For Europe, the organization also said the effects of the region’s loose monetary policy and lower oil prices are spurring growth there.