In its interim economic outlook, published today, the think-tank said it expected growth to rise to 3.6% next year, up from 3.3% forecast for 2017. This improvement largely reflects the combined effects of fiscal and structural initiatives in major economies, notably China, Canada and the US, together with a more expansionary stance in the euro area, the OECD said.
But it went on to warn of a series of risks that threatened to destabilise this positive outlook – notably the increasing popularity of protectionist policies, which the OECD said would hurt global growth and threaten jobs dependent on trade.
The rapid growth of private credit in emerging economies, especially China, is another key risk, as is the housing market in some advanced economies.
OECD general secretary Angle Gurría said: “Growth is still to weak and its benefits too narrowly focused to make a real difference to those who have been hit hard by the crisis and who are being left behind.
“Now, more than ever, governments need to take actions that restore people’s confidence while at the same time resisting turning inwards or rolling back many of the advances that have been achieved through greater international co-operation.”
Among the specific country outlooks highlighted by the OECD were the US, where domestic demand is set to strengthen, supported by gains in household wealth and an upturn in oil production. US GDP growth is expected to rise to 2.4% this year and 2.8% in 2018.
In China, growth is projected to slop to 6.5% this year and down again to 6.3% next year as the Chinese economy transitions from external demand and heavy industry towards domestic consumption and services.
Two other major emerging economies – Russia and Brazil – are both recovering from deep recessions with the help of higher commodity prices and easing inflation.
In Europe, the OECD said the modest pace of growth is expected to continued, but would be hindered in some areas by high levels of unemployment and underemployment – particularly of young people. GDP for the euro area is expected to expand by 1.6% both this year and next.
