OECD cuts global growth forecasts amid 'deep concern' over slowdown

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A "deeply concerning" slowdown in trade, particularly with China, will lead to lower global economic growth this year, says the Organisation for Economic Co-operation and Development.

Global GDP is now expected to grow by 2.9%, down from 3% forecast in September, but will hit 3.3% in 2016.

The OECD said trade had dropped to levels perilously close to those "associated with global recession".

Worldwide trade growth is forecast at 2% this year, down from 3.4% in 2014.

Catherine Mann, the OECD chief economist, said: "This is deeply concerning. Robust trade and global growth go hand in hand."

Calling world trade a "bellwether for global output", she said sluggishness in Europe had now been replaced by weak growth in emerging markets.

China, the world's largest trader of goods, seemed to be "at the heart of this" as its economic slowdown had hit other Asian economies and commodity exporters, she said.

The OECD has repeatedly cut its 2015 global growth outlook from the 3.7% it initially forecast last November.

'Stimulus measures'

But in its bi-annual outlook, the organisation said stimulus measures in China and other countries would help the world economy speed up next year, before accelerating to 3.6% in 2017.

"Policy actions are already being implemented that will help to address the weak underlying trends," Ms Mann said.

Last month, China's central bank cut interest rates for the sixth time in nearly a year, while the ruling Communist party has also ratcheted up infrastructure spending.

However, the OECD expects Chinese authorities will still miss their economic targets, with GDP growth forecast to cool to 6.2% in 2017.

Chinese President Xi Jinping has said China must keep annual growth at 6.5% in the next five years to hit the country's goal of doubling 2010 GDP and household income by 2020.

OECD key 2015 growth figures:

  • Global GDP 2.9%
  • 2% in world trade
  • China GDP 6.8%
  • US GDP 2.4%

The OECD called for the US Federal Reserve to go ahead with its first rate hike since the financial crisis as a recovery gains steam in the United States and Europe.

Expectations of a rise in US interest rates next month have soared following strong employment figures from October.

UK economic growth is projected to continue at a "robust pace", with GDP growing 2.4% this year and in 2016, before dropping slightly to 2.3% in 2017.

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