Kuwait: Global Economy to Continue Strengthening Over Next Two Years - OECD

The global economy will continue to expand over the next two years at a rate slightly higher than earlier forecasts, but there are underlying concerns nonetheless about the longer-term outlook in the absence of certain policy initiatives, the Organisation for Economic Cooperation and Development (OECD) said .

In its latest "Economic Outlook", the OECD, which comprises 35 of the world's most industrialised nations, projected that global economies would grow by an average 3.6 percent this year and by 3.7 percent in 2018, before easing to 3.6 percent in 2019.

"The projections reflect slight improvements in the global economy since the previous Interim Economic Outlook in September 2017, but also concerns about long-term momentum," the report indicated.

The policy recommendations to maintain growth beyond 2019 include the need to boost private sector activity and create more inclusive economic systems and higher wages.

"The world economy has strengthened, with monetary and fiscal stimulus underpinning a broad-based and synchronised improvement in growth rates across most countries," the Paris-based policy body said in its "Outlook".

The OECD noted the negative effects of "prolonged sub-par growth on private sector performance, including investment trade and productivity" and warned that these issues must be tackled to sustain solid growth beyond 2019.

Citing "clear weaknesses and vulnerabilities," OECD Secretary-General Angel Gurria urged in a statement that there should be more efforts to "implement reform packages that catalyse the private sector to promote productivity, higher wages and more inclusive growth.

" The latest projections forecast US growth in 2017 at 2.2 percent, rising to 2.5 percent in 2018, before dropping back to 2.1 percent in 2019. Meanwhile, the Euro area's economies are projected to grow at 2.4 percent in 2017 and 2.1 percent in 2018, slightly higher than previous forecasts But Euro area growth is expected to slow to 1.9 percent in 2019, the OECD noted.

Growth in Japan is pegged at 1.5 percent for 2017, slightly below the forecast in the September 2017 "Interim Economic Outlook", and Japanese expansion is projected to remain close to 1 percent in 2018 and 2019. Expansion in the major emerging market economies is improving, due largely to infrastructure investment in China and recovery from recession in major commodity-exporting economies.

However, the expansion will be slower than in past years. Growth in China is predicted to be 6.8 percent in 2017, 6.6 percent in 2018, and 6.4 percent in 2019. India's growth is projected at 6.7 percent in 2017, 7.0 percent in 2018, before picking up to 7.4 percent in 2019, due to reforms that should boost investment, productivity and growth. Russia is rebounding from recession, and is projected to grow by 1.9 percent in 2017 and 2018 and 1.5 percent in 2019.

Brazil also is expected to emerge from recession, with 0.7 percent growth in 2017, 1.9 percent in 2018 and 2.3 percent in 2019.

Despite the overall positive tone, the OECD reiterated recommendations that policy-makers adopt strategies to boost growth and curtail risks in the financial sector and improve the resilience of their economies and avoid complacency about current performance.