In its latest twice-yearly global assessment, the OECD warned that the world economy is “stuck in a low-growth trap”. The organisation said monetary policy alone could no longer be relied on to deliver growth and governments should be using the fiscal tools at their disposal, such as increases in investment spending, to stimulate demand. It also pointed to several downside risks to global growth, the most immediate of which would be if Britain votes to leave the European Union in a referendum on June 23rd.
The OECD forecast that Brazil’s economy will shrink by 4.3% this year. Official data this week showed that the country’s GDP contracted by 5.4% in the first quarter compared with the same period last year. Although bad, many economists were expecting the figure to be much worse.
Shinzo Abe, Japan’s prime minister, delayed a controversial rise in the country’s sales tax until 2019. The increase, from 8% to 10%, was supposed to take place next April, having already been postponed once. An initial rise in the tax in 2014 was widely blamed for throwing Japan into recession.
India’s economy grew by 7.9% in the first three months of the year compared with the same quarter in 2015. For the fiscal year ending March 31st GDP rose by 7.6%, the fastest pace in five years. The government was quick to take the credit, pointing to its pro-business reforms. But India’s impressive figures came with the usual warnings about their reliability. Other indicators, such as weak private investment and exports, suggest the economic picture is more mixed.
Consumer spending in America grew by1% in April compared with March, the biggest increase in nearly seven years. The data will be taken as more evidence that the economy is racing ahead by those who want the Federal Reserve to lift interest rates again this month.
Martin Senn, who stepped down as chief executive of Zurich Insurance in December, committed suicide at his holiday home in Klosters. Three years ago the company’s finance director also took his own life, prompting soul-searching about the stresses faced by busy executives. An independent investigation into that incident concluded that the insurer’s leadership was not putting undue pressure on management.
