OECD Tempers Global Growth Expectations

By Paul HannonFeaturesDow Jones Newswires

A significant pickup in global economic growth has become less likely this year as the outlooks for the U.S., U.K. and China dim, according to leading indicators released Wednesday by the Organization for Economic Cooperation and Development.

The Paris-based research body's gauges of future activity, based on data for March, pointed to faster growth in Germany and Canada, but steady expansions in other large developed economies. They include the U.S. and the U.K., for which leading indicators were pointing to pickups as recently as February.

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The leading indicators also pointed to steady growth for China, having previously pointed to an acceleration. Of the world's major economies, only India is set to see a turn for the better, since it is no longer likely to slow and should instead record steady growth.

The stalling of the OECD's leading indicators is the latest setback for hopes that 2017 would mark a breakout year for the global economy, after a long stretch of disappointingly weak expansions. At the turn of the year, investors, business people and policy makers had expected to see a series of spending increases and tax cuts from the new U.S. administration that would deliver a boost to U.S. and global growth. But those expectations are now being reassessed.

"The expectations of much faster growth are subsiding," said Sergei Guriev, chief economist at the European Bank for Reconstruction and Development, who was presenting new growth forecasts in a news conference.

Figures released over recent weeks have recorded slowdowns during the first three months of the year in the U.S., U.K. and France, although Germany recorded a pickup. Economists expect to see a rebound during the second quarter.

The OECD's leading indicators are designed to provide early signals of turning points between the expansion and slowdown of economic activity, and are based on a variety of data series that have a history of anticipating swings in future economic activity. The changes in economic activity signaled by the indicators usually follow six to nine months after.

The OECD's composite leading indicator for its 34 members was steady at 100.1 in March. A reading below 100.0 points to growth that is slower than normal.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

May 10, 2017 07:01 ET (11:01 GMT)