The Organisation for Economic Cooperation and Development (OECD) has reduced its growth forecast for the US economy in 2015.
It expects a two per cent growth this year, down from its November forecast of 3.1 per cent. It also anticipates a 2.8 per cent growth for the world's largest economy in 2016, instead of three per cent. The revised figure is due to "transitory disruptions", including a strong dollar and bad weather early in the year, the OECD said.
China also had its growth forecast revised downward, to 6.8 per cent this year rather than 7.1 per cent. However, the eurozone economy is now expected to grow faster (1.4 per cent in 2015 instead of 1.1 per cent) thanks to monetary easting measures by the European Central Bank.
The OECD cut its global growth forecasts for both this year and next, expecting the world economy to grow 3.1 per cent this year and 3.8 per cent in 2016, down from 3.6 per cent and 3.9 per cent growth respectively in its previous forecast.
More investment needed
It said the recovery in the last seven years has been unusually weak, hampering job creation, putting living standards on hold and increasing inequality.
"The global economy is expected to strengthen, but the pace of recovery remains weak and investment has yet to take off," OECD secretary-general Angel Gurria said.
"By and large, firms have been unwilling to spend on plant, equipment, technology and services as vigorously as they have done in previous cyclical recoveries."
The OECD said the gross domestic product of its 34 members will rise 1.9 per cent in 2015 and 2.5 per cent in 2016.
To speed up the global recovery, the OECD recommends that both businesses and government invest more. It conceded that many of the solutions are already in place, particularly loose monetary policy in major economies, adding that in Japan and the eurozone, central banks should continue with their quantitative easing programs as planned. And in the U.S., the Federal Reserve should carry out a gradual increase in rates, it concluded.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.