The Organisation for Economic Co-operation and Development on Thursday slightly lowered its projections for global economic growth this year and next, saying the expansion “may have now peaked.”
The world’s gross domestic product is expected to expand a real 3.7 percent in 2018, down from the 3.8 percent forecast in May, the OECD said in its interim economic outlook report. GDP is seen expanding 3.7 percent in 2019, rather than the previous estimate of 3.9 percent.
“Growth has become less broad-based, with prospects diverging across the major economies, especially among the emerging market economies,” the Paris-based organization said.
It warned that rising tensions between the United States and trade partners including China are “already having adverse effects on confidence and investment plans.”
“Additional trade restrictions will harm jobs and living standards, particularly for low-income households,” it said.
Earlier this week, U.S. President Donald Trump announced new tariffs on $200 billion in Chinese goods, to which Beijing responded with its own levies on $60 billion in U.S. products, escalating the standoff between the world’s two largest economies.
The OECD also cautioned that faster-than-expected normalization of monetary policy in advanced economies such as the United States — which is raising interest rates to the highest level since the 2008 financial crisis — and the European Union could add further pressure on emerging-market economies.
By country, the OECD drastically downgraded its projections for Argentina in 2018 from 2 percent growth to a 1.9 percent contraction, citing strong fiscal consolidation and monetary policy tightening.
Turkey’s projected growth rate was also cut, to 3.2 percent from 5.1 percent.
Japan remained unchanged with a forecast for 1.2 percent growth amid strong business investment, while the United States also held steady with an expected 2.9 percent growth rate.
The eurozone was projected to expand 2 percent this year, slightly down from the earlier estimate of 2.2 percent amid softer demand for exports from the region’s industrial sector.