Economy

OECD Sees Better Outlook, if Trade Escalation Avoided

OECD Sees Better Outlook, if Trade Escalation Avoided

On its latest forecasts, the OECD said "stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based".

And while eurozone growth is expected to ease off from 2.5% past 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. Trade protectionism, however, remains a "key risk" to the world economy, according to the report.

The US economy, by contrast, is seen expanding by 2.9 per cent this year and 2.8 per cent next, helped by the simulative effect of tax cuts.

In its interim economic outlook report, the OECD projects 3.9 percent global growth for 2018 and 2019, up from the November forecasts of 3.7 percent and 3.6 percent, respectively.

Financial markets have been hit by fears of a trade war following U.S. President Donald Trump's move to slap tariffs on steel and aluminum imports.

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

"We think the stronger economy is here to stay for the next couple of years", acting OECD chief economist Alvaro Pereira told Reuters."We are getting back to more normal circumstances than what we've seen in the last 10 years".

More news: Trump wants fair NAFTA to avoid steel, aluminium tariffs

With Britain due to leave the European Union next year, its economic growth was seen easing to 1.1 percent in 2019, unchanged from the OECD's November estimate.

However, the growth rate is still very slow compared to other G20 nations, and well below the average for the group, which is expected at 4.1% in 2018 and 4.0% in 2019.

"The world economy will continue to strengthen over the next two years", the OECD said.

The OECD said high inflation would eat into United Kingdom household income while business investment would slow in the face of uncertainty over Britain's future relationship with the EU. The Paris-based organization had expected growth to be 1.2 percent in 2018 and 1.0 percent in 2019.

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

"Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues".

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


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