Boost for chancellor as OECD revises up growth

The Paris-based organization had previously said Canada's economy was expected to rise by 2.1 per cent this year - better than last year but still modest compared with past economic recoveries from downturns.

"Countries should use increased fiscal space to implement effective fiscal initiatives that boost demand and make government taxes and spending more supportive of long-term growth and equity", the OECD said.

Electronic boards show the recent fluctuations of the Japanese yen's exchange rate against the U.S. dollar outside a brokerage in Tokyo.

The global economy portrayed by the Interim Economic Outlook remains beset by sub-par GDP growth and high inequality, calling for policy responses that advance inclusive growth in the context of increased economic integration.

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"Disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties could, however, derail the modest recovery", the OECD said.

That follows global growth of three per cent past year.

Though Washington was not alone in using nationalistic rhetoric, Mann said the OECD had estimated that a 10 per cent increase in United States import costs would percolate through the economy and ultimately lift export costs by 15 per cent. However, the OECD cautioned that consumption, investment, trade and productivity were all far from strong and that growth rates remained sluggish by past standards, sitting below a historical 4% average.

With the US Federal Reserve widely expected to steadily hike interest rates for some time, the OECD said that exchange rate swings could be expected.

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Its forecasts remained broadly unchanged from its November report, however, both the US and the euro area saw minor downgrades.

"Significant financial vulnerabilities arise from the overreliance on monetary policy in recent years", the outlook stated, "which has led to an extended period of exceptionally low interest rates, rising debt levels in some countries, elevated asset prices and a search for yield".

Next year, the USA economy is projected to grow by 2.8 per cent and Canada's is expected to expand by 2.2 per cent, ahead of the other G7 countries. According to calculations by the organization, the world Gross Domestic Product (GDP) will barely grow 3.3 percent in 2017, a result that left unchanged the predictions issued in November.

As rising inflation hits British consumers and businesses put investment on hold over Brexit, British growth was seen slowing from 1.6 per cent this year to 1.0 per cent in 2018.

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