Potential trade war threatens global economic growth, OECD warns

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The OECD projects that the global economy will grow by 3.9% in both 2018 and 2019, with private investment and trade picking up on the back of strong business and household confidence.

Updating its outlook for the G20, the OECD, which groups 34 of the world's leading economies, raised its global growth forecast for 2018 and 2019 to 3.9 percent - the highest since 2011 - from a previous estimate of 3.6 percent for both years.

It said that the tax cuts in the USA will boost business investment and could add as much as 0.75 percentage point to growth this year and next in the world's largest economy.

As downside risks, the report cited persisting gestures of trade protectionism, the normalization of monetary policies in key countries, demographic changes and a decrease in mid- and long-term investment.

The latest report lifted growth forecasts for the USA and eurozone economies.

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In its quarterly report, the Paris-based research body said it expects growth to ease off in some of those economies this year, but not by as.

OECD Acting Chief Economist Alvaro Pereira observed: "In this environment, an escalation of trade tensions would be damaging for growth and jobs".

Financial markets have been hit by fears of a trade war following U.S. President Donald Trump's move to slap tariffs on steel and aluminum imports.

The body forecasts growth will slump to 1.2 per cent over the course of this year and 1.1 per cent in 2019, as the United Kingdom leaves the EU.

"The world economy will continue to strengthen over the next two years", the OECD said.

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Last week, Stats SA reported higher than expected GDP growth for South Africa in 2017, showing that the economy grew by 1.3%, exceeding National Treasury's expectation of 1.0%.

The OECD forecast the US economy would grow 2.9 percent this year and 2.8 percent in 2019, with tax cuts adding 0.5-0.75 percentage points to the outlook in both years.

"Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues".

The report revised 0.4% higher its predictions for USA growth - hitting 2.9% this year.

"Safeguarding the rules-based worldwide trading system will help to support growth and jobs", it said.

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