JAKARTA (TheInsiderStories) – The global economy is growing at its fastest pace since 2010, but sluggish investment levels mean the momentum will not be sustained, according to the latest economic forecast from the Organization for Economic Cooperation and Development (OECD).
In its latest economic outlook, which it publishes twice a year, the 35-member intergovernmental economic organization projects global GDP growth to be 3.5 per cent in 2017 and 3.75 per cent in 2018.
The outlook also predicts global growth to taper off slightly to 3.6 per cent in 2019, stating that “the foundations for higher potential output and more resilient and inclusive growth do not yet appear to be in place,” said the outlook.
The report states that the lingering effects of the financial crisis are still being felt in terms of sub-par growth in the areas of investment, trade, productivity and wage developments, and this is likely to hold back global growth in the next few years, particularly in emerging economies.
The Switzerland based organization also projected investment rates remain too low to sustain the acceleration of activity states Catherine Mann, the OECD’s chief economist in the report.
“As a result, our projection for global GDP for 2019 shows a tempering of growth rather than continued strengthening,” she said.
The report, which runs to 29 pages, carries detailed assessments of the economies of all OECD member states, as well as several “selected non-member economies”.
Another big concern of the OECD: employment is rising across most rich economies, but people’s wages aren’t.
“It’s against intuition, it’s against basic principles of economics, and normally it should have been otherwise,” OECD chief Angel Gurria said. “Clearly growth has to be made more inclusive.”
“The ongoing digital revolution should be unlocking efficiencies and allowing workers to produce more,” he said. But “nobody will be able to produce more if they don’t have the skills to get the most out of the machine.”
The report also warned of the risks of high corporate debt in China and spiking housing prices in some U.S. cities and rising household debt.
Written by Elisa Valenta, email : email@example.com