OECD downgrades forecast of 2016 global growth to 3%

PARIS - The Organization for Economic and Cooperation Development (OECD) announced in its latest study published Thursday that it lowered its forecast of global growth in 2016 by 0.3 percentage point to 3 percent.

In its Interim Economic Outlook Forecasts, the OECD trimmed the gross domestic product (GDP) forecast of the United States in 2016 by 0.5 percentage point to 2 percent , the forecast of euro area by 0.4 percentage point to 1.4 percent, and Japan by 0.2 percentage point to 0.8 percent.

For emerging economies, the GDP forecast of Brazil has been lowered by 2.8 percentage point to -4.0 percent, but the forecast of China has been kept in the pace of 6.5 percent,and the forecast of India has been upgraded by 0.1 percentage point to 7.4 percent.

The OECD called for a stronger policy response, changing the policy mix to confront the current weak growth more effectively.

The organization suggested that monetary policies should remain highly accommodative in advanced economies, until inflation had shown clear signs of moving durably towards official targets.

In emerging market economies, monetary support should be provided where possible, taking into account inflation developments and capital market responses.

A stronger fiscal policy response, combined with renewed structural reforms, is needed to support growth and provide a more favorable environment for productivity-enhancing innovation and change, particularly in Europe, according to OECD.

OECD chief economist Catherine L. Mann said that "with governments in many countries currently able to borrow for long periods at very low interest rates, there is room for fiscal expansion to strengthen demand in a manner consistent with fiscal sustainability."

"The focus should be on policies with strong short-run benefits and that also contribute to long-term growth. A commitment to raising public investment would boost demand and help support future growth," Ms Mann said.