OECD raises global growth forecast for 2018 to 3.7%

India's growth rate revised downward to 6.7%, down by 0.6 point from its June forecast

The rebound in global growth is not yet secure, the OECD warned on Wednesday, with weak investment by businesses and slow growth in trade and wages raising doubts whether the current momentum will be sustained.

The Organisation for Economic Co-operation and Development left its forecast for 3.6 per cent global growth this year unchanged, while increasing its outlook for 2018 a tenth of a point to 3.7 per cent.

Growth this year is "higher than in 2016 but still below historical norms" said the OECD, which advises industrial nations on economic policy.

"The upturn has become more synchronised across countries," it said, noting that investment, employment and trade are all expanding.

The OECD raised its growth forecast for the eurozone this year by three-tenths of a point to 2.1 per cent. The outlook for Canada was raised by 0.4 percentage point to 3.2 per cent and Japan by 0.2 percentage point to 1.6 per cent.

"However, strong and sustained medium-term global growth is not yet secured," the OECD warned.

"The recovery of business investment and trade remains weaker than needed to sustain healthy productivity growth. Wage growth has been disappointing, keeping inflation at low levels," it said.

The OECD said deeper reforms would be needed to ensure strong future growth in emerging economies, while monetary policy should remain supportive in a number of countries while keeping an eye on financial stability.

It kept its growth forecast for the United States this year unchanged at 2.1 per cent, as it did for next year at 2.4 per cent.

Also unchanged was the OECD's forecast for British economic growth to slow to 1.6 per cent this year and 1.0 per cent next year.

For emerging countries, the OECD raised by 0.2 percentage point its forecast for China's economy to expand this year, to 6.8 per cent. The outlook for 2018 was similarly raised, to 6.6 per cent.

The forecasts for India were cut significantly, with growth this year now seen at 6.7 per cent, down 0.6 point from the forecast the OECD made in June. The growth outlook for 2018 was cut by 0.5 point to 7.2 per cent.

"In India, the transitory effects of demonetisation and of the implementation of the Goods and Services Tax (GST) have led to a downward revision in 2017 growth projections", said the OECD in reference to the country's chaotic removal of high-value notes from circulation.

Meanwhile, Brazil's economy is now seen as expanding by 0.6 per cent this year, a shade lower than the June forecast. The forecast for 2018 is unchanged at 1.6 per cent growth.