Governments must boost spending to escape 'low-growth trap': OECD
Source: Reuters
Ensnared in a "low-growth trap", the world economy will meander along at its slowest pace since the financial crisis for a second year in a row in 2016, the OECD forecast on Wednesday, urging governments to boost spending.
With businesses wary of investing and consumers cautious about spending, the global economy will grow only 3.0 percent this year, the Organisation for Economic Cooperation and Development estimated.
That would be no better than last year, which was already the worst since 2009, although growth would pick up modestly to 3.3 percent next year, the OECD forecast in its biannual Economic Outlook.
Growth at those levels deprives youths of job opportunities and means old people will not get the healthcare and pension benefits they expect, OECD Chief Economist Catherine Mann told Reuters.
"We are breaking promises to young people and old people. Therefore policymakers have to act to break us out of the low growth trap," Mann said in an interview.
Read more: http://www.reuters.com/article/us-global-economy-oecd-idUSKCN0YN46O
Mann warned against counting on central banks alone to lead the return to higher growth rates, with the benefit-to-risk balance of their exceptionally loose monetary policies tipping to the latter.
Therefore, governments should not hesitate to plough money into growth-boosting initiatives like education and infrastructure, financing higher spending thanks to rock-bottom interest rates in many countries.
"The low interest rate environment created by the central banks opens up fiscal space to governments and we are saying that you should use it," Mann said.
drm604
(16,230 posts)It's common sense.
SamKnause
(13,110 posts)Lower interest rates on;
Credit card debt
Mortgage rates
Auto loans
College loans
Medical debts
to 1/4 percent interest rate like the global banks get to take advantage of.
This would free up money that could be spent to boost the economy.
Global banks, the IMF, and the World Bank have sucked countries
and their people dry.
Give the economic advantages to the people, not the banks.
Bayard
(22,163 posts)And it wouldn't increase our national deficit. But will never happen as long as Rethuglicans rule the world.
jtuck004
(15,882 posts)HeartoftheMidwest
(309 posts)...end the policy of AUSTERITY.
jwirr
(39,215 posts)spending as much as it is about targeting the spending. Spent bombs and destroyed tanks do not buy things. People do. The governments have to redo their budgets to give the little guy more money to spend on things that are really needed.
Cut the military and spend on the people.
7962
(11,841 posts)And the vast majority of all that is made here, if we're talking US dollars. ( I know the article is talking about the world as a whole) Much of the rest of the world buys what we make also.
And those jobs arent low paying ones either.
jwirr
(39,215 posts)war had to find something besides military equipment to build. They refitted those plants for other domestic items.
I first heard this suggestion from a young soldier who manned a nuclear bomb site and he was telling us how much it cost us to build that site and maintain it and how most likely would never be used but instead be junked when it got too old.
Yes, we build the weapons of the world but just ask a Vietnam Vet or any other Vet what the real cost of those weapons is. I shudder every time we send another bunch of weapons to some country - soon they will be at war and we will be called to action to stop it.
Eternal war is NOT a good idea.
elleng
(131,140 posts)Austerity Austerity Austerity!
Greece, Still Paying for Europes Spite
http://www.democraticunderground.com/113317472