Growing uncertainty triggered by escalating trade tensions and political risks would cloud global growth outlook, the Organization for Economic Cooperation and Development (OECD) warned on Thursday, expecting weaker economic performance for the 2018-19 period.
In its interim economic outlook, the OECD lowered this year's global growth to 3.7 percent compared to an initial estimate of 3.8 percent. As for next year, it cut global growth by two percentage points to 3.7 percent.
"Economic growth prospects are now slightly weaker across the board than anticipated in May... Escalating trade tensions, tightening financial conditions in emerging markets and political risks could further undermine strong and sustainable medium-term growth worldwide," Paris-based think-tank said.
"Outlook identifies the worrisome slowdown in trade growth - combined with widespread political uncertainty - as the principal factor weighing on the world economy. It underlines that further trade restrictions could have adverse effects on jobs and living standards, particularly for low-income households," it added.
It noted that unlike broad-expansion seen by the end of 2017, economic activities will accelerate at different patterns across the countries over the next two years.
In the United States, growth would accelerate by 2.9 percent in 2018, unchanged from May forecast, then it would lose one percentage point to 2.7 percent in 2019, it said.
As for the euro area outlook, the OECD saw decelerating trend with its three top economies: Germany, France and Italy could show this year with a growth rate of 1.9 percent, 1.6 percent and 1.2 percent respectively.
"It is urgent for countries to end the slide towards further protectionism, reinforce the global rulesbased international trade system and boost international dialogue, which will provide business with the confidence to invest," said Laurence Boone, OECD Chief Economist said.
"With tighter financial conditions creating stress on a number of emerging economies, especially Turkey and Argentina, a strong and stable policy framework will be key to avoid further turbulence," she added.
In this context, the OECD recommended more action to boost productivity and improve inclusiveness and enhance resilience to shocks in both emerging and advanced economies.
It also called on policymakers to steer fiscal policy toward measures that support long--erm growth and focus reforms on skills and labor market inclusion to improve opportunities for all.
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