00:00Let's start with that outlook for the global economy and the resilience that you see in the
00:04face of tariffs from the United States. Is there still risk that the impact of those tariffs is
00:10just delayed or are you quite confident that actually the global economy has confronted them
00:15with some resilience? Well firstly the global economy has been remarkably resilient this year
00:24and I mean there are several reasons for that. First I mean there was a level of elevated trade
00:29activity earlier in the year in anticipation of announced tariffs and that had a clear impact.
00:35There was increased investment in particular in the United States in relation to I.I. and indeed
00:40there was a level of elevated level of macroeconomic support that we saw in countries around the world.
00:47So we see global growth this year about 3.2 percent which you know is below the historical trend but
00:54it's still a very strong performance in all of the circumstances. Though we do see a softening.
01:00We expect a softening to 2.9 percent next year and we do see quite a level of downside risk. I mean
01:06there is certainly when the fact that tariffs I mean the impact of tariffs are yet to be fully felt.
01:13There is a continued level of tried tension and policy uncertainty and and of course there's a whole range of other structural pressures that continue to rise such as the structural economic and fiscal impact of population aging and indeed the level of pressure that that applies to growth moving forward.
01:33Okay. And can I ask you about upside and downside risks to your forecast from what we're seeing developing around Ukraine on on on the one hand prolonged conflict I imagine would be well maybe that is your base case on the other hand do we see an upside risk to the forecast if we see an end to the violence in Ukraine and enter Russia's war there.
01:52Well you know peace is always better for business and better for growth. I mean you know of course I mean you know leaving you know we would want to see a just and lasting peace for the people of Ukraine as soon as possible.
02:09I mean that clearly you know would be good for Ukraine it would be good for the people in Russia and it would be good for the global economy and you know that is just one of the areas of tensions and conflict around the world that it would be good to resolve on an ongoing and sustained basis indeed.
02:27Mateus let me ask you about AI investment because you said in your latest outlook that that's helped offset the drag on the world economy from trade tariffs. I wonder how long can that last?
02:39Well you know we do expect that the level of investment in relation to AI will continue to increase for some time and and of course you know over the medium to long term we do expect you know a significant beneficial impact when it comes to productivity growth from the accelerating diffusion and adoption of AI across the economy.
03:01And so I mean we do think that there is still a lot of opportunity in the AI space.
03:08But are you worried about valuations and them posing a significant risk to financial markets?
03:15I wonder how if there was a sudden repricing that would affect the global economy?
03:20Well look I mean there certainly is I mean one of the downside risks for the economy right now is you know the whole issue of potentially high asset overvalued assets and you know in particular in relation to the AI space.
03:38But we will have to see we will have to continue to see we have to see how that continues to evolve and we'll have to monitor that very carefully.
03:46But I mean that is a risk but whether that risk will eventually we will have to see.
03:51And with that in mind with the the risks of the global economy as you've set out there Matthias and and perhaps some of the upside risks as well.
03:59Rate cutting at that cycle of rate cutting it seems to be slowing down in many of the large global economies and some of them obviously pivoting to hikes.
04:09What would your what would your thinking be around the rate cutting cycle and whether it should continue?
04:16Yeah well I mean we would always say that central banks need to continue to assess the data very carefully and you know if and where appropriate.
04:26You know of course you know interest rates will be able to continue to be lowered but that is very much dependent on the data and it's it's quite appropriate for central banks to be prudent in particular in in the context of the very recent high you know inflation cycle.
04:45So do you think there's a risk of too much too much cutting too much loose monetary policy I'm thinking here about the United States where there are there is still an inflation print that is above target.
05:00Well look I mean you know I know that central banks all around the world including the United States looking very carefully at the data and I'm making these decisions based on what they see come through in the data.
05:11And that is what we would recommend that they continue to do.
05:17Okay well as we're talking about the US it was of course one of the founding members of the OECD in 1960.
05:26Now Matthias there are concerns about lower US contributions to your organization.
05:31Have they cut their funding?
05:33The US is a highly valued and indeed founding member of the organization and you know our financial arrangements are consistent from year to year based on decisions that are made by a council our council of members collectively and there has been no change to those arrangements.
05:58I mean we will in the ordinary course of events have discussions about our next budget cycle over the next 12 months and we'll see how these conversations go.
06:08But at this point you know it is business as usual.
06:12So you're not worried they might change those contributions in the near future?
06:15We will look for all of the opportunities to continue to strengthen the partnership and the engagement with the United States.
06:26I mean the OECD is an organization that brings together market biased economies from around the world.
06:32You know we believe it's a great platform for the United States to engage with countries from around the world about how best to tackle you know shared global economic policy challenges.
06:44And I'm sure that we will continue to explore many exciting opportunities in particular for example when it comes to ensuring reliable and secure supply chains related to II and you know many other economic and fiscal policy issues that are in front of us.
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