Investment key to improving global economy, says OECD

Global chartsGlobal growth is expected to reach pre-crisis levels by the end of next year but increased investment is needed.

The Organisation for Economic Co-operation and Development (OECD) says that activity has become more evenly shared across the major economies and overall external imbalances are less marked than in the run-up to 2007.

However, global growth was weaker in the first quarter of 2015 than any quarter since the crisis. The OECD says that this “softness” is transitory but productivity growth continues to disappoint, reflecting in part tepid business investment that has weakened the spread of new technologies.

The organisation sees global growth at 3.1% in 2015, growing to 3.8% in 2016. This growth is thanks to low oil prices, widespread monetary easing and a reduction in the drag from fiscal consolidation in the major economies.

“To move from a ‘B-minus’ grade to an ‘A’ means boosting investment in order to create jobs and stimulate consumption”, says OECD chief economist Catherine Mann.

She adds that structural policies need to be put in place to raise productivity and encourage competitive markets. This is part of a package combining monetary and fiscal policies that deliver adequate demand growth and reduce policy uncertainty.

Secretary-general of the OECD, Angel Gurria, warns that while the global economy is projected to strengthen, “the pace of recovery remains weak and investment has yet to take off”.

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