OECD Sees Better Outlook, if Trade Escalation Avoided

  • OECD Sees Better Outlook, if Trade Escalation Avoided

OECD Sees Better Outlook, if Trade Escalation Avoided

Global economic growth accelerated a year ago as higher investment and falling unemployment drove pickups in most major economies. But it also warned that the risk of trade wars could derail expansion.

Upgrading its forecasts, the Paris-based group in part cited US tax cuts for the better numbers.

Britain was seen missing out on the global upturn, lagging all other G20 countries with growth of only 1.3 percent this year.

"Growth is steady or improving in most G20 countries and the expansion is continuing", the group said.

The OECD forecast the USA economy would grow 2.9 percent this year and 2.8 percent in 2019, with tax cuts adding 0.5-0.75 percentage points to the outlook in both years.

Britain is set to miss out on buoyant global economic growth over the next two years, according to new forecasts by the Organisation for Economic Co-Operation and Development (OECD). That's up from 3.7 per cent and 3.6 per cent respectively compared with its November projections.

The body forecasts growth will slump to 1.2 per cent over the course of this year and 1.1 per cent in 2019, as the United Kingdom leaves the EU. The OECD, which groups 35 developed economies, called on the world's major nations to avoid a dispute that could impede trade, demand, competition and, ultimately, the health of the global economy.

The OECD projects that the global economy will grow by 3.9% in both 2018 and 2019, with private investment and trade picking up on the back of strong business and household confidence. The Paris-based organization had expected growth to be 1.2 percent in 2018 and 1.0 percent in 2019.

"I think it is very important to avoid escalation and to initiate a strengthening in the global dialogue to solve not only the problem for steel but to avoid bigger repercussions in terms of trade".

President Emmanuel Macron's social welfare, tax and labor market reforms would help France narrow the gap with Germany, with growth forecast at an 11-year high of 2.2 percent (+0.4) before easing to 1.9 percent in 2019 (+0.2).

"Safeguarding the rules-based global trading system is essential to prevent the longer-term harm to growth prospects that could arise from a retreat from open markets", it said.