The global economy has reached its period of maximum expansion, and what plays now is to prepare a “soft landing”. But there are obstacles that can make the ride more turbulent than expected. Some carried the Organization for Economic Cooperation and Development (OECD) alerting for at least one year: trade tensions —and protectionist temptations that are behind them— negatively affecting the growth, stresses once more the agency with headquarters in Paris. To this must be added now a greater risk of inflation due to the rise in oil prices, warns the OECD in its latest report on prospects for global growth. Spain is not saved in the midst of this more complex scenario: the report percent off two-tenths to the GDP growth forecast for this year (to 2.6%) and the next (2.2%).
“labor market conditions continue to improve, with the unemployment rate of the OECD is now at its lowest level since 1980, but the growth of investment and trade have been softer than anticipated, the financial market conditions have hardened and the trust continues to dissipate,” explains the international organization. “The slowdown in trade growth, conditions in global financial tighter and higher oil prices are contributing to the attenuation of global expansion”, says the organization, which has presented its forecasts on Wednesday in Paris.
MORE INFORMATION The OECD warns that trade tensions are taking a toll on the overall growth of The services of economic studies decreased their forecast of the GDP by 2018 The chinese economy slows down in full trade war with the united States
These, in fact, point to a slight decline of the global economy, having reached this 2018 its peak, with a growth of 3.7%, which will reduce in 2019 and 2020 to 3.5%, 0.2 percentage points less than in the mid-term review of September, according to the latest forecasts of the organization.
euro Zone and Spain
For the eurozone, the OECD now provides that 2018 will close with a growth of 1.9%, which will decrease 1.8% next year, and to 1.6% in 2020. An accommodative monetary policy, fiscal policy mildly stimulatory in 2019, a growth to “solid” employment and financing conditions favorable. “provide support to domestic demand, but are appearing headwinds through weaker external demand and greater political uncertainty,” he warns.
Against this background, the economist head of the OECD, Laurence Boone, insists the agency’s recommendations for Europe to “complete” their monetary union, especially with the “fragile atmosphere” prevailing. “It is urgent for Europe to complete its banking union (…), progress towards the establishment of a fiscal capacity, common would help to maintain confidence in the ability of the euro area to react to shocks and sustain growth”, he explains.
Furthermore, makes an urgent call to all of Europe before the difficult negotiations of the Brexit: “it Is imperative, stresses in his opening words— that the European Union and the United Kingdom reach an agreement that keeps the closest possible relationship between the parties”.
Within the eurozone, Spain also is saved from the crop of forecasts. If may still be amended up their omens, that optimism has evaporated. The agency with headquarters in Paris forecasts now that the country will grow this year finally 2.6%, versus 2.8% expected six months ago. Also forecasts to 2019 decline: by 2.2% the next year (in may expected 2.4%) and 1.9% in 2020. In spite of the “moderation” of the growth, unemployment will continue to drop”, 15,3% this year and 13.8% in 2019, a rate that is still considered “high”.
ECONOMIC FORECASTS
Source: OECD. THE COUNTRY
Recommendation to Spain: more infant schools
This situation is disturbing in so much that, according to the diagnosis of the OECD, domestic demand is the main “driver of growth” in Spain. And it is difficult to eat between the high unemployment and precarious jobs. There that point to the importance of the “increases in wages (of civil servants) and the pension” planned in the Budgets of 2018 as one of the factors that have helped to keep private consumption. And, also, to urge once more to “continue the efforts to combat the abuse of temporary contracts”, one of the real keys, he points out, to Matadorbet “reduce the duality” of a labor market that “continues to be segmented, with high rates of unemployment among young people and the long-term and temporary jobs”.
once more, the international body insists on the basic role that you will play with education to reinforce the Spanish economy: it insists on the need of structural reforms to improve the training of workers from the school. In this sense, indicates that to increase the offer of places for the education of children from 0 to 3 years “would boost the labour force participation of women and improve the training of future capabilities, especially for children from disadvantaged backgrounds”. Once more, also, recommended to improve the training of teachers and bet for dual vocational training.
More productivity and universities specialized
The OECD also recommends that there be more communication between different areas of the State and between administrations, central and regional. “An improvement in the coordination of social and employment services would reduce unemployment and inequalities,” he says.
“The low growth of productivity is hampering the generation of inclusive and sustainable growth. It is essential to ensure the effective implementation of structural reforms that address the fragmentation of product markets to achieve economies of scale. Greater coordination and evaluation of regional and national policies in the field of innovation, in order to avoid duplication and encourage greater scale and specialisation of universities, it would increase the quality of the innovation”.
In any case, the OECD makes it clear that there are not that accommodating. Because risks “remain substantial”. Among others, a growth of global trade less than the projected “would undermine exports.” Turbulence in the international markets, or political uncertainty could also reduce the confidence of the private sector, hampering the much-needed domestic demand. To end on a more positive note, the organization points out that, at the same time, domestic demand could prove more resilient than expected “if the job creation is greater than anticipated”.
Barriers to world trade
The ralentizacion economic also feel the other side of the Atlantic. For the united States, the international body warns that 2.9% growth this year down to 2.1% in 2020. Also in China, enzarzada in a battle, and trade with Washington, the economy will continue its progression to a low of 6.6% in 2018 to 6.0% within two years. For these two countries the OECD launches, once more, a warning would be: “New maneuvers to increase the barriers to bilateral trade would hurt the production in those economies, with adverse effects on global growth and trade”.
on the contrary, “a rapid resolution of trade tensions, or political ambition structural more strong in the world, could improve confidence and to limit the brake of the investment due to the high uncertainty” situation. Therefore, insists the OECD, is an “immediate need” to “reduce the uncertainty, slowing the slide towards protectionism and strengthen the international trading system based on global rules through a multilateral dialogue”.
In this sense, Boone urges to act on the next big appointment of the heads of State and government of the major economies, the G20 in Buenos Aires at the end of the month. “A concrete action at the level of the G20 would send a positive signal and help to show that the countries know how to act in a coordinated and cooperative if growth slows more strongly than expected.”
Another of the issues that are of concern to the OECD is the growing price of fuel, which so far this year it has increased by 30% with respect to 2017. The “continued uncertainty” about the potential disruption of the supply, especially in Venezuela and Iran, is responsible for a “volatility considerable prices” which threaten also the desired “soft landing” of the global economy.
