Expansion of global growth “may have peaked” according to the Organization for Economic Co-operation and Development (OECD).
In its latest interim outlook released Thursday, the OECD has projected global growth to settle at 3.7 percent in both 2018 and 2019. That level sits just below levels recorded prior to the financial crisis ten years ago.
The recently appointed chief economist of the OECD, Laurence Boone, told CNBC’s Charlotte Reed on Thursday that the world economy on the whole was “hitting a plateau” and there was evidence of increased divergence between different economies.
Boone highlighted rising protectionism, emerging market vulnerability, politics, and finance as four main risks behind the tapering off in growth rates.
The OECD report has called for a gradual normalization of monetary policy but said it should be at a varying degree across different economies.
Speaking to CNBC, Boone said the normalization of policy in the United States was pushing the dollar upwards and creating a drag on emerging market economies.
“That obviously has an impact on how investors look at their funds and they are starting to repatriate from emerging markets to the U.S. economy,” she added.
Boone suggested that most emerging market countries were in the most part not at risk from the trend, with the likely exception of Turkey and Argentina.
On China, Boone said international trade tariffs were impacting the country “more or less in the same way”, as Beijing had managed to steer a portion of the economy away from its previous reliance on exports.
The OECD’s chief economist also highlighted Brexit as a major source of uncertainty and said it was “vital” that a deal is struck in order to maintain a close relationship between European Union (EU) and Britain.
Britain is due to leave the EU in March 2019 and issues remain unresolved over what kind of trading and customs arrangement will be put in place following that date.
Boone also highlighted Italy as a country to keep an eye on, citing the country’s lack of growth and the high level of both corporate and public debt.
