The Organization for Economic Cooperation and Development lowered on Wednesday its projection for global economic growth next year, citing headwinds including the ongoing trade dispute between the United States and China.
Worldwide gross domestic product is expected to grow a real 3.5 percent in 2019, the OECD said in its latest economic outlook report, down from 3.7 percent forecast in September. It kept its growth projection for 2018 unchanged at 3.7 percent, while forecasting a slight slowdown to 3.5 percent in 2020.
“Recent developments suggest that the global expansion has peaked and is likely to slow over the next two years,” the Paris-based organization said.
“Labor market conditions are still improving … but investment and trade growth have proved softer than anticipated, financial market conditions have tightened, and confidence has continued to ease,” it said.
It warned that heightened trade tensions “remain a significant source of downside risk to global investment, jobs and living standards.”
The United States has raised tariffs on $250 billion of goods imported from China under President Donald Trump’s “America First” agenda, and is threatening to do so on the remaining $260 billion. China has retaliated with tariffs on $110 billion of U.S. imports.
By country, the OECD downgraded its growth projections for Japan in 2018 from 1.2 percent to 0.9 percent and in 2019 from 1.2 percent to 1.0 percent, with a scheduled increase in the consumption tax next October expected to weigh on demand. The organization expects the world’s third-largest economy to grow 0.7 percent in 2020.
China’s growth projections were revised slightly downward to 6.6 percent in 2018, 6.3 percent in 2019 and 6.0 percent in 2020 amid slowing exports and infrastructure investment.
The OECD kept its forecasts for the United States unchanged with an expected growth rate of 2.9 percent in 2018, 2.7 percent in 2019 and 2.1 percent in 2020, with business investment being underpinned by Trump’s recent tax reform.
The eurozone is seen expanding 1.9 percent in 2018, 1.8 percent in 2019 and 1.6 percent in 2020, a slight downgrade from previous forecasts.