Potential trade war threatens global economic growth, OECD warns

Potential trade war threatens global economic growth, OECD warns

An improved outlook for world economic growth will be placed at severe risk if a trade war results from US metal tariffs, a report has warned.

In its latest snapshot on global performance the Organisation for Economic Cooperation and Development (OECD) raised its growth forecast for both 2018 and 2019 to 3.9% - the highest since 2011 - from a previous estimate of 3.6%.

It credited tax cuts in the US, the world's largest economy, for much of the upgrade - though the international forum warned that protectionist policies were a big risk factor in the forecast.

The OECD's acting chief economist said any trade war resulting from US President Donald Trump's planned import duties on steel and aluminium products, would prove "fairly damaging".

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

It said the eurozone would also grow by more than originally expected - at a rate of 2.3%.

But while it also revised slightly upwards its expectations for the UK economy - to growth of 1.3% during 2018 - it said Brexit uncertainty would continue to weigh on performance.

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

"Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues. Safeguarding the rules-based international trading system is key.”

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