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OECD outlook positive for the US, slow for China, UK
November 30, 2016, 9:20 am

China's economy needs to undergo structural reforms with focus on innovation, experts agree [Xinhua]

China’s economy needs to undergo structural reforms with focus on innovation, experts agree [Xinhua]

The Organization for Economic Cooperation and Development (OECD) said on Monday that global growth would accelerate to 3.3 per cent in 2017, up from 2.9 per cent this year, as part of its biannual economic outlook.

The report provided an optimistic outlook for the US, forecasting next year’s growth at 2.3 per cent, up from the 2.1 per cent it had estimated in September.

This comes largely due to the Trump administration’s planned tax cuts and public spending which are set to boost the economy.

According to the report, China, which is not an OECD member, will see economic growth at 6.7 per cent this year, but edge down to 6.4 and 6.1 in 2017 and 2018, respectively.

The OECD forecast is similar to one from the International Monetary Fund (IMF) made in August which said that the Chinese economy is expected to grow 6.6 per cent this year, with the inflation rate rising to 2 per cent.

Chinese authorities have said they targeted a growth rate of 6.5 to 7 per cent.

In early 2015, it had forecast a 7-per cent growth rate, later revised to 6.9 per cent – its lowest in nearly 25 years

China has this year for the first time in 21 years opted to provide a range for its economic growth forecast rather than a specific number target.

Meanwhile, uncertainty caused by the UK’s decision to exit the euro zone is likely to constitute a major economic risk for the country which the OECD predicted will grow 2 per cent in 2016, but slow down to 1.2 per cent and 1.0 per cent in 2017 and 2018.

The OECD warning on the UK’s economy came in tandem with statements made by European Central Bank chief Mario Draghi who said that Britain’s economy would be the first to suffer if its exit from the European Union leads to protectionist economic measures.

“If, in the long run, the risk of a less-open UK economy in terms of trade, migration and foreign direct investment were to materialize, there would be a negative impact on innovation and competition and, thus, productivity and potential output,” Draghi said.

The BRICS Post with inputs from Agencies

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