The OECD has revised its forecasts for the global economy’s next six months up, largely on the back of Donald Trump’s planned tax cuts and infrastructure spending plans in the USA.
The twice-yearly Economic Outlook said 2016’s 2.9% growth would hit 3.3% in 2017, rising to 3.6% in 2018.
“Most of the signs of the low-growth trap that we have been talking about for a long time now are still there. In fact, however, there is reason to hope that the global economy may be at a point of inflection,” said OECD Secretary General Angel Gurria.
Faster US growth would suck in imports and drive unemployment down further, tightening the labour market and raising wages. In turn that would force interest rate rises, to an estimated 2% by 2018.
The OECD is also relatively upbeat about the economic impact of Brexit, with growth revised up to 2% from 1.8%, although that would be halved by 2018.