- Trump’s trade war, slowing growth in China and a fragile eurozone are all contributing to a global economic slowdown, the Organisation for Economic Cooperation and Development (OECD) said Wednesday.
- The OECD cut its growth expectations for the world economy from 3.5% to 3.3%, with all but two major economies seeing their forecasts trimmed.
- “The global economy is facing increasingly serious headwinds,” Laurence Boone, the OECD’s chief economist said in a statement. “A sharper slowdown in any of the major regions could derail activity worldwide, especially if it spills over to financial markets.”
The global economy will slow faster in 2019 than previously expected, with US President Donald Trump’s trade war continuing to drag on growth, according to the latest data from the Organisation for Economic Cooperation and Development (OECD) released Wednesday.
The OECD’s quarterly update on the global economy showed that it expects GDP growth to average out at around 3.3% in 2019, down from 3.5% at its last update in November last year. That update saw growth expectations shaved from 3.7% at the previous economic update.
“The global economy is facing increasingly serious headwinds,” Laurence Boone, the OECD’s chief economist said in a statement.
“A sharper slowdown in any of the major regions could derail activity worldwide, especially if it spills over to financial markets,” he added.
Factors contributing to the global slowdown, the OECD said, are numerous, but the organisation picked out a weakening Chinese economy, and slowing global trade related to the US’ protectionist agenda, as key drivers.
Here’s the key extract from the OECD’s latest analysis:
“Economic prospects are now weaker in nearly all G20 countries than previously anticipated. Vulnerabilities stemming from China and the weakening European economy, combined with a slowdown in trade and global manufacturing, high policy uncertainty and risks in financial markets, could undermine strong and sustainable medium-term growth worldwide.”
The latest update from the OECD saw the organisation trim not just global growth expectations, but also growth expectations for virtually every major economy on the planet. The UK saw a particularly sharp downgrade, with the looming threat of a no deal Brexit pushing the OECD to forecast just 0.8% GDP growth in the UK this year.
The chart below shows the OECD’s full range of forecasts:
The OECD’s warning about slowing global growth comes just over 24 hours after China’s central government said it would lower its growth target for gross domestic product, the latest sign that the world’s second-biggest economy is in the grips of a major slowdown.
Cutting its target for GDP growth from 6.5% to between 6% and 6.5%, China placed the blame on the trade war with the United States, which has seen the two countries swap tit-for-tat tariffs on a combined $US360 billion worth of goods.
The scope of the trade war increased this week after the US kicked both India and Turkey out of a longstanding trade agreement, the Generalized System of Preferences. The program effectively exempts many nations, including the likes of Turkey and India, from tariffs on certain goods exported to the US.
Business Insider Emails & Alerts
Site highlights each day to your inbox.