OECD Demands “Urgent” Policy Response As Global Growth Heartbeat “Flatlines”
by Tyler Durden
ZeroHedge.com
02/18/2016
Last year, virtually all the very “serious people” threw in the towel on global growth and trade.
It’s been apparent for quite some time (like say, a couple of years) that the slump in trade growth has likely become structural and endemic as opposed to transient and cyclical in the post crisis world.
As WSJ noted last autumn, 2015 marked the third year in a row that the rate of growth in global trade trailed the already sluggish expansion of global GDP. “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should,” WTO chief economist Robert Koopman remarked.
Part of the shift is due to China’s transition from an investment-led, smokestack economy to a consumption and services led model and the rest is attributable to the fact that things simply “ain’t what they used to be” in terms of economic fundamentals.
All of this led the OECD to cut its forecast for global growth last September to 3% for 2015. “Global growth prospects have weakened slightly and the outlook is clouded by important uncertainties,” the organization said, adding that “emerging economies have vulnerabilities that could be exposed by rising US interest rates and/or a sharper-than-expected slowdown in China, giving rise to financial and economic turbulence that could also exert a significant drag on advanced economies.”
Make no mistake, 2016 has certainly demonstrated that EM is vulnerable to liftoff and that a Chinese hard landing (and the attendant devaluation of the yuan) has indeed precipitated “financial and economic turbulence” with the potential to spill over into advanced economies.
Given that, we weren’t surprised to see the OECD cut their 2016 growth forecast to 3% from 3.3% in November. “Global economies have flatlined,” read a tweet from the OECD’s official Twitter. “Urgent policy response needed.”
The Rest…HERE
