The Organization for Economic Cooperation and Development (OECD) again lowered the forecast for global economic growth for 2019, noting the negative effects of trade tensions.
The OECD lowered its forecast for global economic growth for 2019 by 0.1% compared with the March estimation to 3.2%. This is the minimum growth rate since 2016. The growth in trade flows this year will be almost halved to 2.1%. Next year, global growth should accelerate to 3.4%, as expected in March, but only if the United States and China refuse to increase the tariffs announced this month.
OECD warned that growth rates in China and the United States could decline by an average of 0.2-0.3% by 2021 and 2022 if countries do not change course.
On May 10, the USA increased the import duties on Chinese goods in the amount of $200 billion from 10% to 25%. In addition, Washington began preparing for the introduction of higher duties on imports of Chinese goods for another $ 300billion.
China, in turn, announced the introduction of increased duties on US goods worth $60 billion from June 1.
Excluding the latest round of duties, the OECD predicts that the US will outstrip other major developed economies with a 2.8% increase this year. In March, the organization predicted a growth of 2.6% in 2019.
Next year, even without taking into account the new increase in duties, the growth of the world's largest economy will slow to 2.3%. The March forecast assumed a slowdown to 2.2%.
According to OECD estimates, China’s GDP in 2019 will increase by 6.2%. Next year, growth is expected to slow to 6% and be minimal in 30 years. Both indicators correspond to the March forecasts of the organization.
The export-dependent economy of Japan will also suffer from reduced trade flows. The GDP growth forecast for 2019 has been reduced from 0.8% to 0.7%, and in 2020 from 0.7% to 0.6%.
Organization experts expect that eurozone GDP will increase by 1.2% in annual terms in 2019 and by 1.4% in 2020. The March forecast assumed a smaller increase – by 1% and 1.2%, respectively.
The OECD also raised its UK GDP growth forecast for 2019 from 0.8% to 1.2%. The forecast for 2020 increased from 0.9% to 1%.
As reported by “Vesti.Ekonomika” the leaders of the European Union countries in April agreed to postpone the exit of the UK from the block until October 31. This reduced the Brexit risk without a deal but extended a period of economic uncertainty.