OECD revises up Japan's 2018 growth forecast to 1.2 percent

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The growth forecast for this year was unchanged from the economic outlook report released in June, while the projection for next year was raised by 0.1 point.

Globally, the pace of expansion is expected to pick up this year compared to 2016, with a further uptick projected in 2018.

However, the recovery of business investment and trade remain too low to sustain healthy productivity growth, the OECD said.

Despite unemployment falling to below 4.5pc the think-tank claims weak levels of productivity and wage growth has led it to foresee a slowing of the United Kingdom economy in 2018.

The previously identified growth slowdown is expected to continue through 2018, while uncertainty remains over the outcome of negotiations around the decision to leave the European Union, the OECD said.

The OECD upped its forecasts for the eurozone to 2.1% for this year, up three basis points from its previous 1.8% estimate, and increased its 2018 forecast by one point to 1.9%.

Even so, the risk of an Australian interest rate rise next year has become a hot topic among economists following the recent run of strong jobs growth.

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Meanwhile, Brazil's economy is now seen as expanding by 0.6 percent this year, a shade lower than the June forecast.

Growth in the major emerging market economies has improved overall, helped by a rebound in some commodity producers and public infrastructure investment in China, although growth remains subdued in a number of oil-exporting economies.

Japan's growth forecasts were raised by 0.2 points each to 1.6% and 1.2%, respectively. The outlook for 2018 was similarly raised, to 6.6 percent.

In its latest interim economic outlook the OECD warned the long period of low interest rates has boosted house prices and created financial distortions that will be "testing to resolve".

"Strong import demand from China in the early part of 2017 has been a key driver of the higher than anticipated growth in the region", it said. Consumer spending and business investment are strong, while wage growth has yet to take off, it said.

The Interim Economic Outlook renews calls on policymakers to enact a rebalancing from monetary to fiscal and structural support for growth and wages.