European governments should increase spending to “reignite” global growth, according to an Organisation for Economic Co-operation and Development report.
The organisation, better known as the OECD, raised concerns about the stagnation of global trade amid multilateral trade talks, which undermines investment. The Pari-based developed economies think-tank warned that the global economy still very much depends on “unprecedented” monetary stimulus.
The OECD is warning that unless countries with “fiscal space” – particularly Germany and The Netherlands – do not increase public spending, there could be a prolonged period of low growth. Boosting investment by 0.5% a year for their national GDP could add 1% to GDP growth in the Eurozone.
Sweden and Switzerland also have the fiscal space to boost public spending without increasing their debt-to-GDP ratio, the OECD reported. Spain, the UK, and Italy should not risk undermining future debt sustainability, according to the Paris-based organization.
The OECD projects global growth at 3.2% in 2019 and 3.4% in 2020, which is below the 2017-2018 average.