Published: Tue, March 13, 2018
Finance | By Loren Pratt

Potential trade war threatens global economic growth, OECD warns

Potential trade war threatens global economic growth, OECD warns

City and academic economists expect the United Kingdom economy to expand at an annual pace of 1.5% over the next two years, and Chancellor Philip Hammond is expected to reveal a more optimistic outlook in updated official forecasts on Tuesday.

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". Trade protectionism, however, remains a "key risk" to the world economy, according to the report.

U.S. President Donald Trump last week formally signed proclamations to impose a 25-percent tariff on imported steel and a 10-percent tariff on aluminum, causing mounting dissent among business groups and trading partners around the world.

The UK will be the slowest-growing economy in the G20 barring South Africa if the OECD's predictions come through, with growth well behind the 2.2 per cent average expected in the Eurozone or the 2.5 per cent annual expansion in the US.

It credited tax cuts in the U.S., 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.


Britain is set to miss out on buoyant global economic growth over the next two years, according to new forecasts by the Organisation for Economic Co-Operation and Development (OECD). That was higher from a November forecast of 1.2 percent due to the broader global improvement.

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).

National Treasury now anticipates growth of 1.5% in 2018, rising to 2.1% in 2020. 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. The Paris-based organization had expected growth to be 1.2 percent in 2018 and 1.0 percent in 2019.

He said: "Investment is coming back, and so this is very good news for good new for jobs and growth across the economies".

"Governments should avoid escalation and rely on global solutions to resolve excess capacity in the global steel industry".

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