OECD warns of global economic woes after growth

The Organization for Economic Cooperation and Development (OECD) has warned of fresh global economic woes following a period of mild growth.

The falling price of oil and low interest rates have sparked modest global economic growth but pose risks to financial stability, the OECD said Wednesday.

Revising its November forecast upward by 0.1 percent, the Paris-based thinktank said it expected aggregate growth among major global economies to be 4 percent in 2015. It also revised upward by 0.2 percent its outlook for 2016, to 4.3 percent.

But OECD chief economist Catherine Mann warned of lagging employment and said that abnormally low inflation and interest rates could lead to financial instability, DPA reported.

“An excessive reliance on monetary policy alone is building up financial risks, while not yet reviving business investment,” Mann said.

“A more balanced policy approach is needed, making full use of fiscal and structural reforms, as well as monetary policy, to ensure sustainable growth and public finances over the long term.”

Growth over the next two years in India is set to outpace China, the OECD said in its Interim Economic Assessment report, with the 2015 growth outlook in India at 7.7 percent and at 7 percent in China.

The gap in growth rates is set to grow wider in 2016, reaching a full percentage point, as China settles near its target growth rate of 7 percent.

Other than China and India, the OECD predicted the US to have the strongest growth rate, at 3.1 and 3 percent over the next two years. In the European Union, growth in Britain was set at 2.6 and 2.5 percent, followed by Germany with 1.7 percent in 2015 and 2.2 percent in 2016.