Trade tensions cloud best global growth outlook in 7 years - OECD

OECD Sees Better Outlook, if Trade Escalation Avoided

OECD Sees Better Outlook, if Trade Escalation Avoided

Amid a global economic recovery boosted by extended investment and trade, South Korea is expected to maintain its 3 percent growth momentum throughout year 2018 and 2019, according to the Organization for Economic Cooperation and Development.

Growth will particularly be powered by private investment and trade picking up on the back of strong business and household confidence, the OECD said.

In its interim economic outlook report issued Tuesday, the organization forecast global economic growth for this year at 3.9 percent, up from its previous suggestion of 3.7 percent.

It said pre-Christmas tax cuts in the USA, the world's largest economy, would account for much of the upgrade though it warned that protectionist policies were a big risk factor.

Alvaro Pereira, the OECD's acting chief economist, said: "US steel and aluminium tariffs will raise costs and harm consumers, while not solving the global overcapacity problem". However, it believes faster growth in the world's biggest economy will result in four increases in interest rates from the Federal Reserve, the United States central bank, this year.

By contrast, more jobless claims were recorded in Italy where the joblessness rate rose by 0.2 percentage point to 11.1 percent.


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

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

The eurozone economy will likely see a robust and broad-based expansion, with growth in gross domestic product estimated at 2.3 percent this year and 2.1 percent next year. In Germany, growth is seen coming it at 2.4 per cent this year and 2.2 per cent next, up from 2.3 per cent and 1.9 per cent previously.

Fiscal easing in Germany's coalition agreement was seen lifting growth in the euro zone's biggest economy to 2.4 percent this year (+0.1 percentage point) and 2.2 percent in 2019 (+0.3).

With the euro area economy resilient, rising inflation would allow the European Central Bank to reduce its bond purchases gradually this year and subsequently phase out its negative interest rate policy, the OECD said.

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