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The
world economy is set to grow 3.0 percent this year and 3.6
percent next year, the Paris-based Organisation for Economic
Cooperation and Development said in an update of its forecasts
for major economies.
It trimmed its estimates from 3.1 percent and 3.8 percent in
June, citing primarily a slowdown in emerging market economies
like China and Brazil.
"Global growth prospects have weakened slightly and become less
clear in recent months," OECD chief economist Catherine Mann
told Reuters in an interview.
The United States stood out as a bright spot. The OECD raised
its growth outlook for this year to 2.4 percent from 2.0 in
June. It lowered its 2016 forecast to 2.6 from 2.8 percent
previously, though.
The OECD saw more arguments in favor of the Federal Reserve
raising interest rates than standing pat when its policymakers
meet this week rather than at their next meeting at the end of
the year.
"Raising interest rates now would remove uncertainty in the
markets," Mann said. The pace of future increases was more
important than whether the Fed acted now or in December,
according to the OECD's simulations, she said: "The path matters
four times as much as the timing."
Looking at the euro zone, its outlook was the brightest in four
years. Its growth was projected at 1.6 percent this year and 1.9
percent next year.
However, the bloc should be growing as much as a full percentage
point faster, Mann said, with a weak euro and low interest rates
and oil prices in its favor. It was not because it remained too
burdened by its debts, she said.
The euro zone's priority should be repairing the banking system
and tackling bad loans, she said, rather than extending or
expanding the European Central Bank's bond-buying program as
some economists have suggested following recently weak inflation
data.
The OECD slightly lowered its growth estimate for China to 6.7
percent for this year and 6.5 percent next year after a string
of disappointing data and plunges on its stock market.
Brazil was a particularly weak spot in the global economic
outlook. The OECD forecast its economy would contract 2.8
percent this year and 0.7 percent next year as it struggles with
a collapse in the price of commodities it exports.
(Reporting by Leigh Thomas; editing by Michel Rose, Larry King)
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