Published: Tue, March 13, 2018
Business | By Max Garcia

Trade tensions cloud best global growth outlook in seven years: OECD

Trade tensions cloud best global growth outlook in seven years: OECD

And while eurozone growth is expected to ease off from 2.5% previous year to 2.3% in 2018 and 2.1% in 2019, major continental economies like Germany and France are forecast to out-perform the UK.

It sees the world economy expanding 3.9 per cent in both 2018 and 2019, the strongest since 2011.

As downside risks, the report cited persisting gestures of trade protectionism, the normalization of monetary policies in key countries, demographic changes and a decrease in mid- and long-term investment.

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

"Growth is steady or improving in most G20 countries and the expansion is continuing", said OECD acting chief Economist Alvaro Pereira, "[But] an escalation of trade tensions would be damaging for growth and jobs".

It credited tax cuts in the United States, the world's largest economy, for much of the upgrade - though the global forum warned that protectionist policies were a big risk factor in the forecast.

This is up from a forecast last November of 3.7% in 2018 and 3.6% in 2019.

On Britain, the OECD struck a particularly cautious note, pencilling in growth of only 1.3 per cent this year.

"In Japan, where underlying inflation and inflation expectations remain low, current stimulus measures need to be continued to help achieve the inflation target", the OECD said.

"Stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based". 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.

Growth in France is expected to hit an 11-year high of 2.2 per cent this year before easing to 1.9 per cent 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".

"Safeguarding the rules-based worldwide trading system will help to support growth and jobs", it said.

National Treasury now anticipates growth of 1.5% in 2018, rising to 2.1% in 2020.

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