OECD – “Alarm Bells Ringing Loud and Clear”
The OECD just released their latest Economic Outlook and it reinforces other recent reports from the likes of IMF and IIF calling for tough times ahead for the global economy.
The OECD have the global economy growing at its lowest rate since the GFC at 2.9% this year and no relief for the next few years being range bound between 2.9 and 3%. The effects of the coordinated central bank stimulus programs appear to have peaked in 2018 at 3.5% from the GFC.
Breaking it down sees the US dipping from 2.3% this year to 2.0% next and into 2021, Euro 1.2% down to 1.1% next year, Japan 1% down to 0.6% next year and Australia actually improving from a very ordinary 1.7% this year to 2.3% next year.
Importantly for Australia, and indeed the world, is that they don’t see China coming to the rescue again this time. They see Chinese GDP settling dropping from 6.2% this year to 5.7% next and 5.5% in 2021 and don’t expect the PBOC to keep the credit expansion going in line with the gradual decline observed of late. They see China continuing its rebalancing away from reliance on exports and manufacturing towards consumption and services.
Weighed down by escalating trade wars they are joining the chorus demanding an end to protectionism and the start of fiscal stimulus from Governments given the impact of central bank stimulus appears to have waned.
“The alarm bells are ringing loud and clear. Unless governments takes decisive action to help boost investment, adapt their economies to the challenges of our time and build open, fair and rules-based trading system, we are heading for a long-term future of low growth and declining living standards”