Global economic growth weakest since financial crisis, says OECD

Global economic growth has fallen to its slowest rate since the global financial crisis, according to the Organisation for Economic Co-operation and Development (OECD).

In its bi-annual set of forecasts, the Paris-based organisation said worldwide GDP growth dropped to 2.9% for 2019, down from 3.6% the year before, while growth is seen remaining steady at 2.9% in 2020.

However, the OECD warned that the risk of even weaker growth remained high, with particular threats including an escalation of trade conflicts, geopolitical tensions, the possibility of a sharper-than-expected slowdown in China and climate change.

The OECD's chief economist Laurence Boone said that, though central banks have been easing decisively and have paved the way for structural reforms and bold public investment to raise long-term growth, fiscal policy introduced by governments around the world has been "only marginally supportive".

He also warned lawmakers to avoid complacency after apparent recent economic stabilisation.

"The situation remains inherently fragile, and structural challenges – digitalisation, trade, climate change, persistent inequalities – are daunting," said Boone.

Meanwhile, the UK's economic progress was forecast to remain sluggish, with GDP growth of 1.0% predicted for the next two years even under the assumption that a smooth exit from the European Union will be achieved.

In the meantime, Brexit-related uncertainty is seen as likely to hold back investment until there is clarity about future trading arrangements, while Britain is also exposed to global financial risks, global economic slowdown and rising protectionism.

"Leaving the European Union may exacerbate these vulnerabilities. By contrast, investment prospects could recover faster should the United Kingdom and the European Union agree on a future close economic relationship," said the OECD.