Issues around trade are a menace to the strongest world economic expansion prospects in 7 years, today’s statement by the OECD says. It also says that in 2018 US is expected to raise rates four times as tax overhaul stokes the globe’s leading economy, while the UK will suffer from Brexit.
Being generally more upbeat than several months back, the OECD made clear that a trade war could damage the prospects, and predicted that all of G20 states would be pulled back by UK expansion because of Brexit situation.
The Organization uniting 34 chief economies of the globe, revising its forecast for the G20 lifted its global expansion outlook for this and the next year to 3.9%, which is the maximum figure since 2011, from 3.6% it gave for the same years previously.
The more optimistic prediction was formed on expectations that US tax reduction would push economic expansion, the OECD says.
But the world economy could decelerate due to trade issues linked to the new tariffs that the US set for steel and aluminum, a measure that will likely cause responsive actions on the part of the EU and other countries. By all means this is a threat to the rebound, and the hope is it doesn’t materialize as it would be rather detrimental, says Alvaro Pereira, chief economist with OECD.