Business

OECD predicts fastest global growth in six years

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The OECD has predicted the global economy is set to grow 3.5% this year, its best performance since 2011, with growth nudging up to 3.6% in 2018.

It is a slight improvement on the think tank's 3.3% estimate, which it predicted in March.

The OECD said increased trade and investment flows had offset a weaker outlook in the US.

It said UK growth forecasts of 1.6% in 2017 and 1% in 2018 remained unchanged from its March prediction.

Room for improvement

Despite the OECD's upgrade to its global growth forecast, secretary general, Angel Gurria remained downbeat:

"Everything is relative. What I would not like us to do is celebrate the fact we're moving from very bad to mediocre.

"It doesn't mean that we have to get used to it or live with it. We have to continue to strive to do better."

He warned that the improved outlook could be damaged by protectionism and it was not strong enough to satisfy people's expectations for a better standard of living or greater equality.

Growth continues to fall short of rates seen before the 2008-09 financial crisis.

Spending squeeze

On the UK economy, the OECD said it will slow in the coming years as Brexit uncertainty hampers growth and consumers endure a spending squeeze caused by higher prices and lower wages.

Its economic forecast said: "Households are expected to continue to support their consumption by further reducing their saving rate.

"Business investment is projected to contract amid the large uncertainty and because of lower corporate margins."

German growth has helped boost the eurozone economy, with forecasts at 1.8% both this and next year, up from 1.6% for 2017 and 2018 respectively.

The think tank downgraded its outlook for the US, despite a weaker dollar boosting exports and tax cuts supporting household spending and business investment.

The OECD forecast US growth of 2.1% this year and 2.4% in 2018.

This is down from March when it estimated a 2.4% increase in US growth this year and 2.8% for 2018.

The OECD's 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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