OECD Warns There Is A “Disconnect” Between Markets And The Global Economy

In a report released this morning by the Organisation for Economic Cooperation and Development titled “Will risks derail the modest recovery? Financial vulnerabilities and policy risks” the OECD warns the global economy may not be strong enough to withstand risks from increased trade barriers, overblown stock markets or potential currency volatility, and adds that the “disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties could derail the modest recovery.”
The OECD projects global GDP growth to pick up modestly to 3 per cent in 2018, from just under 3% in 2016, boosted by fiscal initiatives in the major economies, a forecast which is broadly unchanged since November 2016 and notes that while confidence has improved, “consumption, investment, trade and productivity are far from strong, with growth slow by past norms and higher inequality.”
Furthermore, the OECD notes that the pace of growth will remain well short of its average in the two decades before the financial crisis because of weak investment and productivity gains.
‘We have acceleration but I’m concerned about this really soft foundation to the recovery,’ OECD Chief Economist Catherine Mann said in a Bloomberg interview. ‘We still have this slow, sluggish productivity growth and persistent inequality. Put those together and it’s hard to see the robust consumption and investment profile you need to really get things going.’

This post was published at Zero Hedge on Mar 7, 2017.