Global Economy: Headed in the Wrong Direction

This week, the OECD released its Economic Outlook for November 2015, revising 2016 real GDP growth in the OECD area downward from 2.5% to 2.2%, following its June 2015 report. The OECD noted a collapse in import volumes in emerging markets (especially China), and the sort of slowdown in global trade growth that has historically accompanied recessions. Real fixed investment was again disappointing, and the OECD once more pleaded with countries to take advantage of low interest rates and increase public infrastructure investment, in part to tackle climate change.

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OECD: World Economy Stuck in a Low-Growth, Low-Investment Equilibrium

This week, the OECD released its twice-yearly Economic Outlook. Following the contraction of the Canadian and US economies in the first quarter of 2015, what was the weakest period of global growth since the Great Recession, the OECD downgraded its forecast for global growth to 3.1% in 2015, from 3.7% projected last November. Six years into the “recovery,” 40 million people in the OECD remain unemployed, 7.5 million more than the pre-crisis peak. The unemployment rate remains above 11% in the Eurozone. Summing up the global economy, the OECD writes, “in effect, many economies have become stuck in a low-growth and low-investment equilibrium, with persistent unemployment, stagnant wages, and non-robust consumption.”

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