The Organization for Economic Cooperation & Development, on Thursday, downgraded it global growth projections for both 2018 and 2019, and signaled that the impact of the trade war between the US and China has started showing.
According to Interim Economic Outlook, released Thursday, the global economy will grow 3.7 percent each this year and next. In May, the OECD had projected 3.8 percent expansion for 2018 and 3.9 percent for 2019.
The United States will expand 2.9 percent in 2018 and 2.7 percent in 2019, the agency said. China’s growth is seen at 6.7 percent this year and 6.4 percent in 2019.
Growth is expected remain modest in the UK at 1.4 percent this year and 1.3 percent next year, owing to high uncertainties about the outcome of Brexit negotiations.
In Turkey, growth is expected to stay around 5 percent this year and next. “The uncertainties surrounding the early elections in June, as well as persisting regional geopolitical tensions, create risks,” the OECD said.
The Paris-based think tank said escalating trade tensions, tightening financial conditions in emerging markets and political risks could further undermine strong and sustainable medium-term growth worldwide.
“Trade tensions are starting to bite, and are already having adverse effects on confidence and investment plans,” OECD Chief Economist Laurence Boone, said.
“Trade growth has stalled, restrictions are having marked sectoral effects and the level of uncertainty on trade stances remains high.”
With tighter financial conditions creating stress on a number of emerging economies, especially Turkey and Argentina, a strong and stable policy framework will be key to avoid further turbulence, added Boone.
The think tank urged policymakers to enhance resilience, boost productivity and improve inclusiveness.