The global economy is expected to grow around 3.5 percent in 2018 compared to 3 percent in 2016, but the modest recovery may be derailed, the Organization for Economic Cooperation and Development warned in its latest economic outlook report.
The OECD has noted that confidence has picked up but consumption, investment, trade and productivity remain weak.
“Disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties could, however, derail the modest recovery,” the OECD said in its report.
Its forecasts remained broadly unchanged from its November report, however, both the U.S. and the euro area saw minor downgrades.
The OECD is particularly concerned with political uncertainty in Europe amid rising support for anti-establishment parties.
“Uncertainties in many countries about future policy actions and the direction of politics are high,” the OECD noted.
“Many countries have new governments, face elections this year or rely on coalition or minority governments. More generally, falling trust in national governments and lower confidence by voters in the political systems of many countries can make it more difficult for governments to pursue and sustain the policy agenda required to achieve strong and inclusive growth,” it added.
