Global growth has passed its recent peak and is slowing down amid trade tensions and financial risks, a think-tank has warned.
Growth forecasts have been revised down for many of the world's biggest economies in 2019 by the Organisation for Economic Co-operation and Development (OECD) in their latest Economic Outlook report released today.
An initial forecast for next year released in May predicted that global GDP would expand by 3.7%, but this has been adjusted to 3.5%.
Increasing risks to trade and investment could affect the "soft landing" from the slowdown in growth, the OECD warned.
Positive indicators such as record low unemployment rates in most countries could be offset by tariff hikes, higher interest rates and weakening currencies.
The OECD's "shakier outlook" for 2019 is reflective of deteriorating prospects in emerging markets such as Turkey, Argentina and Brazil.
However, the growth prediction of 3.5% in 2020 is indicative of slower trade and lower fiscal and monetary support in advanced economies.
#OECD #EconomicOutlook projections to 2020 just released. The world #economy to grow by 3.7% this year but only 3.5% in 2019 and 2020, says OECD. Watch the live press conference https://t.co/EM9Xx5HihA and get more #stats pic.twitter.com/oXs00sjQ4A— OECD Economics (@OECDeconomy) November 21, 2018
In Ireland, economic activity is forecasted to "remain robust, but to ease gradually".
The economy is projected to grow by 4.1% in 2019 but at a much slower rate of 3.4% in 2020.
Domestic demand will remain strong, and there will be solid employment growth and consumption.
Despite this, the OECD projects "significant" wage pressures and moderation of job growth as we approach full employment, leading to higher inflation.
The strain on housing doesn't look set to abate with property prices set to "remain very high" but spurring strong investment in construction.
"Property prices may increase more strongly than projected, which would further boost construction activity in the near term but may lay the foundation for another boom-and-bust cycle if associated with another surge in credit growth," the OECD reports.
"The property market remains buoyant and has been driving strong credit growth.
"House prices continue to rise strongly, driven by strong income growth and a shortage of supply, though they are currently at well below pre-crisis levels.
New housing completions have been catching up with demand, but there will continue to be shortages in the dwelling stock for some time. Rising property prices are becoming a concern for competitiveness and for housing affordability for low-income households.
Brexit is referenced by the think-tank, with Ireland poised to be one of the most negatively impacted EU countries if negotiations reach a "disorderly conclusion".
The OECD says that our fiscal position will not show much improvement over the next two years, and that the government "should remain committed to improving the fiscal position", while being ready to ease this stance should no deal be reached on Brexit.
In the UK, next year will see projected growth at 1.4%, while this will slow to 1.1% in 2020.
The OECD warns that uncertainty surrounding Brexit is holding back economic growth.
"Economically, the preferred Brexit option should be to forge an agreement that will ensure the closest possible trading relationship with the European Union and high access for financial services to overseas markets," it says.
"Temporary measures will be needed to cushion the economy and support displaced workers in the event of a no-deal exit."
It warns that "authorities should stand ready to react" should no deal be reached on Brexit.
2019 will see forecasted growth at 1.8% in the Euro area and 2.7% in the US, with both slowing to 1.6% and 2.1% respectively the following year.
Commenting on today's release of the Economic Outlook., Laurence Boone, OECD Chief Economist, said there are currently few indications that the global slowdown will be more severe than projected.
"But the risks are high enough to raise the alarm and prepare for any storms ahead. Cooperation on fiscal policy at the global and euro level will be needed," she said.
Shoring up the global economy also involves responding to people’s concerns about the lack of improvements in wages, living standards and opportunities.
"Promoting competition to improve business dynamics can help by increasing workers’ bargaining position and lowering prices for consumers.
"Investing in skills is also crucial. It raises productivity and income and reduces inequality between workers.”
Presenting the Outlook, OECD Secretary-General Angel Gurría said: “Trade conflicts and political uncertainty are adding to the difficulties governments face in ensuring that economic growth remains strong, sustainable and inclusive.
“We urge policy-makers to help restore confidence in the international rules-based trading system and to implement reforms that boost growth and raise living standards – particularly for the most vulnerable.”