Trade tensions cloud best global growth outlook in seven years: OECD


"Stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based".

And while eurozone growth is expected to ease off from 2.5% a year ago to 2.3% in 2018 and 2.1% in 2019, major continental economies like Germany and France are forecast to out-perform the UK.

The OECD predicts the fastest world growth since 2011 this year, helped by United States tax cuts and spending in Germany.

"Backed by the global trade recovery, minimum wage hike, and household income expansion, South Korea's economic growth will remain at 3 percent in 2018-2019", the OECD report said, retaining its former forecast for Asia's fourth-largest economy.

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 higher forecast was in part due to expectations that USA tax cuts would boost economic growth there, it said.

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The UK will be the slowest-growing economy in the G20 barring South Africa if the OECD's predictions come through, with growth well behind the 2.2 per cent average expected in the Eurozone or the 2.5 per cent annual expansion in the US. That's up from 3.7 per cent and 3.6 per cent respectively compared with its November projections.

For South Africa, the OECD has revised the expected GDP growth rate upward to 1.9% in 2018, and 2.1% in 2019 - higher than the growth rate now targeted by National Treasury. The OECD, which groups 35 developed economies, called on the world's major nations to avoid a dispute that could impede trade, demand, competition and, ultimately, the health of the global economy.

In contrast, stronger growth in France and Germany boosted the outlook for the broader euro zone to 2.3 percent for this year and 2.1 percent in 2019.

In its interim economic outlook report issued Tuesday, the organization forecast global economic growth for this year at 3.9 percent, up from its previous suggestion of 3.7 percent.

"I think it is very important to avoid escalation and to initiate a strengthening in the global dialogue to solve not only the problem for steel but to avoid bigger repercussions in terms of trade".