Citing trade tensions, weak business investment and political uncertainties as key inhibitors to global economic growth, the OECD has slashed its growth forecast for 2019 in the latest edition of its bi-annual Economic Outlook published earlier today.
The OECD expects the world economy to grow by 2.9 percent this year, down from its May 2019 estimate of 3.2 percent and from 3.5 percent growth in 2018. This would be the lowest level of economic expansion since the end of the financial crisis, and possibly the trough of the current slowdown, although the OECD expects economic growth to remain subdued through 2020 and 2021.
Urging policy makers to take a leading role in the transition to cleaner energy and in adapting to an increasingly digital world, OECD Chief Economist Laurence Boost said: “It would be a mistake to consider these changes as temporary factors that can be addressed with monetary or fiscal policy: they are structural. Without coordination for trade and global taxation, clear policy directions for the energy transition, uncertainty will continue to loom large and damage growth prospects.”
The current slowdown involves both advanced and emerging economies, as nine of the world’s ten largest economies are expected to see weaker growth this year than they did in 2018. The following chart shows the latest growth projections for the world’s largest economies, as well as the previous forecast dating back to May 2019.