OECD revises up Japan's 2018 growth forecast to 1.2 percent

Posted September 22, 2017

The OECD upped its forecasts for the eurozone to 2.1% for this year, up three basis points from its previous 1.8% estimate, and increased its 2018 forecast by one point to 1.9%.

The short-term outlook is more broad-based and the upturn is promising, but there is no room for complacency, said OECD Chief Economist Catherine L. Mann.

Still in Europe, the United Kingdom growth forecast for this year and next were left unchanged at 1.6% and 1%, respectively.

Growth in Japan is expected to be 1.6 per cent this year and 1.2 per cent next year.

The OECD kept its forecast for global economic growth unchanged at 3.5 per cent for this year and upped it slightly, to 3.7 per cent from 3.6 per cent, for 2018. Global growth was 3.1% in 2016.

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However, the pace of growth in Canada is expected to slow in the second half of the year. That's 0.3 percentage point more than its previous prediction in June and means the region will match the expected growth rate of the US, which was left unchanged. Its June forecast noted the economy was gaining steam, propelled by government spending on infrastructure, social housing, education and innovation, as well as rising household wealth and rebounding business investment, particularly in the resource sector. The investment bank said China's growth remains "on track" although it may soften from 6.9 percent in the second quarter to 6.7-6.8 percent in the third quarter.

In its latest interim economic outlook the OECD warned the long period of low interest rates has boosted house prices and created financial distortions that will be "testing to resolve".

"In India, the transitory effects of demonetisation and of the implementation of the Goods and Services Tax (GST (Taiwan OTC: 5262.TWO - news) ) 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.

"Strong import demand from China in the early part of 2017 has been a key driver of the higher than anticipated growth in the region", it said.

The Interim Economic Outlook renews calls on policymakers to enact a rebalancing from monetary to fiscal and structural support for growth and wages.