Better, but not good enough

"Better, but not good enough": this is how the Organisation for Economic Cooperation and Development (OECD) sees developments in the global economy.

The OECD also answered its own question - "Will risks derail the modest recovery?" - initially posted in March's Interim Economic Outlook.

In its June report, the OECD declared that it expects a modest pick-up in global growth - lifting its 2017 forecasts to 3.5% from March's prediction of 3.3% - and this time "with upside risks."

According to the OECD: "The mood in the global economy has brightened during the last year. Confidence indicators, industrial production, headline measures of employment, and cross-border trade flows have improved in most economies."

Moreover: "There are upside risks to the projections for investment, trade, and productivity. Evidence from business surveys and from data suggests that the ageing of the capital stock may spur investment in higher quality capital with more advanced technology. This would improve cyclical conditions and support a revival of investment-intensive global value chains, with knock-on benefits to domestic demand".

Better - but not good enough. The OECD added: "However, this still-modest cyclical expansion is not yet robust enough to yield a durable improvement in potential output or to reduce persistent inequalities ... Compared to the 20-year pre-crisis average against which expectations have been set, OECD per capita GDP growth remains over 1/2 percentage point weaker and global growth overall, projected to rise to just above 31/2 per cent by 2018, also lags."

And risks remain. The OECD highlighted the financial risk from elevated and rising credit growth and house prices and interest rate gaps - monetary policy divergence between the US and the Eurozone and Japan. "Closing this policy-path gap will likely engender higher financial volatilities than are currently priced in."

"Financial vulnerabilities continue to cloud the projections. Geopolitical shocks and trade protectionism could catalyse snap-backs in asset prices and realise downside risks through a variety of channels."

Overall, the latest OECD report did not break new grounds. Indeed, most of its assessments appear to be similar to that contained in the International Monetary Fund's (IMF) World Economic Outlook, April 2017 report - where the Fund also lifted its 2017 global growth forecast to 3.5% (from 3.4% predicted three months before).

Then again, it's comforting  to be reminded where we're at and the risks to look out for.

Read more: OECDEurozoneGlobal Economic OutlookInterim Economic OutlookInternational Monetary FundJapanWorld Economic Outlook
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