Although the Washington-based group saw a weaker outlook in the US economy, it predicted 3.5 per cent GDP growth globally this year – an increase from its previous 3.3 per cent forecast – and 3.6 per cent in 2018.But Angel Gurria, OECD secretary-general, warned that the forecasts could be damaged by protectionist policies and that, anyway, the growth might not be large enough to satisfy expectations of improved quality of life.“Everything is relative,” he said. “What I would not like us to do is celebrate the fact we’re moving from very bad to mediocre. It doesn’t mean that we have to get used to it or live with it. We have to continue to strive to do better.”The OECD reduced its forecast for US growth this year to 2.1 per cent, down from its prediction in March of 2.4 per cent. Next year’s growth was reduced from 2.8 to 2.4 per cent, mainly because of the delays in President Donald Trump’s promised introduction of tax cuts and infrastructure spending.

Improved forecasts for Europe

However, the weaker prospects in the US were offset by improved forecasts for the eurozone, Japan and China. The eurozone upgrade from growth of 1.6 per cent to 1.8 per cent for the next two years was primarily on the back of improved output in Germany.The OECD added, “Beyond domestic policies, on the international front, policymakers need to harness the full range of international economic cooperation tools to level the playing field to ensure that international trade is governed by fair rules that are followed, that all businesses adhere to high standards of conduct, that cross-border tax arrangements are transparent and fair, that corruption is reduced, and that labour and environmental standards are respected.”

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“Major risk” for the UK economy

For the UK, the OECD is sticking to its predictions of 1.6 per cent growth this year and 1 per cent next, but it said the economy could slow in the coming years because of Brexit uncertainty and a consumer spending squeeze as a result of higher inflation overtaking wage growth.“Private consumption growth is projected to slow, as higher inflation holds back real earnings, but a weaker growth outlook should mitigate the extent of price pressures in the economy,” said the OECD’s economic outlook report.“Also, households are expected to continue to support their consumption by further reducing their saving rate. Business investment is projected to contract amid the large uncertainty and because of lower corporate margins. Weaker growth could push the unemployment rate (currently at a 40-year low of 4.6 per cent) above 5 per cent.”It said the decision to leave the European Union continued to represent a “major risk” to the UK economy, with the impact of Brexit very much dependent on what future trade arrangements the UK managed to reach with the remaining 27 members of the bloc.But the OECD added that the devaluation of sterling against both the dollar and euro since last June’s referendum was boosting exports and improving competitiveness.For related news and features, visit our Enterprise section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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