OECD cuts global growth forecast to 2.9 per cent as headwinds from emerging markets "greatly increase"

Emma Haslett
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When China catches a cold... (Source: Getty)

The Organisation for Economic Cooperation and Development has cut its global growth forecast for 2.9 per cent.

The Paris-based think tank attributed a "sharp slowdown" in emerging markets, which it called "deeply concerning".

"Headwinds [in emerging economies] have generally increased, reflecting weaker commodity prices, tighter credit conditions and lower potential output growth, with the risk that capital outflows and sharp currency depreciations may expose financial vulnerabilities," the OECD said.

It highlighted Brazil and Russia as being particularly vulnerable. Having experienced recessions this year, the two countries will "not return to positive growth in annual terms until 2017".

Meanwhile, China also faces challenges. The OECD said growth in the country will slow to 6.8 per cent this year and 6.2 per cent this year.

"Achieving this rebalancing, while avoiding a sharp reduction in GDP growth and containing financial stability risks, presents significant challenges," it said.

The news comes a day after China unveiled sharply slower imports and exports in October.

It's the second time the organisation has cut its global forecast - in September it cut the figure to three per cent, from 3.1 per cent.

However, in the coming years it expects global growth to pick up, to 3.3 per cent in 2016 and 3.6 per cent in 2017.

“The slowdown in global trade and the continuing weakness in investment are deeply concerning," said Angel Gurria, the OECD's secretary general.

"Robust trade and investment and stronger global growth should go hand in hand. G-20 leaders meeting in Antalya need to renew their efforts to secure strong, sustainable and balanced growth.”

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