Global trade flows have slowed dangerously and are close to the levels that usually accompany global recessions, the Organization for Economic Co-operation and Development (OECD) warned on Monday and again lowered forecasts for economic growth.
In that international club of rich countries, they forecast that global trade will grow by only two percent this year, a pace of growth that has been recorded only five times in the last five decades and coincided with crises in time - 1975, from 1982 to 1983, 2001 and in 2009, reports SEEbiz.
"It is deeply worrying", warned the chief economist of the OECD, Catherine Man, and reminded that trade is a key indicator of global economic activity.
This year, the OECD expects economic growth of 2,9 percent, which lowered the forecast from September by 0,1 percentage point. This is the latest in a series of reductions in growth estimates since November last year, when they forecast growth of 3,7 percent for this year.
The growth of the global gross domestic product (GDP) should accelerate to 3,3 percent next year, with the support of stimulus measures in China, and to 3,6 percent in 2017. The forecast for the next year has thus been lowered by 0,3 percentage points. .
"Governments have already taken certain measures that should help eliminate weak basic trends. "China has announced a series of stimulus measures, including lowering interest rates for bank lending and increasing infrastructure investment," Men said.
In the OECD, they believe that the United States of America (USA) should definitely start with the first increase in interest rates after the financial crisis, given the increased momentum of economic activities in the country itself and in Europe, despite the slowdown that mainly affects emerging markets and China.
The growth of the American economy should reach 2,4 percent this year, and 2,5 percent next year, according to new OECD forecasts. According to the earlier forecast, they expected a growth of 2,6 percent in the next year.
In 2017, US GDP is expected to grow by 2,4 percent.
"Therefore, the normalization of interest rates should be carried out cautiously, bearing in mind the risks associated with too long delays in such moves," the OECD announced.
They estimate that the Federal Reserve (Fed) will raise interest rates in December and continue to raise them gradually thereafter.
The OECD suggested the Fed to raise interest rates as early as September, but the American central bank still decided to wait. In the latest report, the OECD notes that the delay has caused large cross-border capital flows and market turmoil, making it difficult for governments to take action in emerging markets.
Although the US is recording strong growth in activity and falling unemployment, wages have yet to rise significantly.
"If that doesn't happen, the recovery will lose momentum, and the chances of the U.S. spurring a recovery in global trade and economic growth will be called into question," Men said.
The OECD lowered its growth forecasts for the Eurozone as well, to 1,5 percent this year and 1,8 percent next year, or 0,1 percentage point each.
For the next year, the OECD lowered the growth forecasts for the German and French economies, but raised them for the Italian economy.
He raised the forecast for China by 0,1 percentage point for this year to 6,8 percent, and confirmed the growth forecast for the next year of 6,5 percent. In 2017, China's growth is expected to slow down to 6,2 percent, according to the OECD report.
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