Global Economic Growth Prospects Lowered Due to Trade Conflicts: OECD Report
Here's a lively rewrite:
Bloody Hell, Paris!
The bloody Organisation for Economic Co-operation and Development (OECD) cut the world's economic growth forecast yesterday, sounding the alarm over President Donald Trump's bloody trade wars, which will reportedly decimate the world economy, with the US getting the brunt of the damage.
Last year's modest 3.3 percent growth is expected to weaken to a "dismal" 2.9 percent this year and next, the Paris-based OECD warned in a fresh report. In March, they had projected growth of 3.1 percent for this year and 3 percent for the next.
"The global outlook is getting murkier by the day," said the OECD, an economic policy group representing 38 wealthy countries. They've issued a stark warning—rising trade barriers, tightened financial conditions, weaker business and consumer confidence, and heightened policy uncertainty are all poised to take a bite out of global growth if they persist.
The OECD is hosting a ministerial meeting in the City of Lights this week, and there's talk that US and EU trade negotiators will meet on the sidelines to discuss Trump's threats to slap tariffs of 50 percent on EU goods. The G7 is also gathering for a trade summit.
OECD chief economist Alvaro Pereira told reporters that the best move is for countries to get their acts together and strike a trade deal. "Avoiding further trade fragmentation is a top priority in the coming months and years," he said firmly.
In the report, Pereira predicted gloom and doom for the US, forecasting growth of only 1.6 percent this year, a significant drop from the previous projection of 2.2 percent, and a further slowdown to 1.5 percent next year. The OECD blames the causes for this decline: escalating trade tariffs, retaliation from global trading partners, a surge in policy uncertainty, a freeze on immigration, and a sharp decline in the size of the federal workforce.
The OECD also raised concerns about inflation in the US, which is predicted to reach nearly 4 percent by the end of this year, double the target set by the US Federal Reserve. Meanwhile, annual inflation is expected to moderate among the G20 economies to 3.6 percent this year and 3.2 percent next year, with the US as the lone exception.
Looking at other economies, the outlook for China was slightly revised down from 4.8 to 4.7 percent this year. Japan was hit with a significant downgrade, with the OECD shaving off 0.4 percent from their growth forecast, predicting growth of 0.7 percent this year. The eurozone's economic growth remains steady at 1 percent.
Pereira isn't ruling out the possibility that trade policy uncertainty and new trade barriers could push global growth even further down the drain. "According to our simulations, additional tariffs would further cripple global growth and stoke inflation, further curbing global growth," he said. So there you have it—tough times ahead for the global economy, especially for those who just can't help stirring the pot with trade wars.
The trade wars initiated by President Trump are causing concerns within the finance industry, as they are predicted to have a significant impact on the global business sector, according to the OECD. This decline is attributed to escalating trade tariffs, retaliation from global trading partners, a surge in policy uncertainty, a freeze on immigration, and a sharp decline in the size of the federal workforce in the US.
In an effort to avoid further trade fragmentation, countries are urged to strike a trade deal, as rising trade barriers, tightened financial conditions, weaker business and consumer confidence, and heightened policy uncertainty are all posing threats to global growth, as warned by the OECD.
