Donald Trump warned European Union trade war could DERAIL global economic recovery

Donald Trump warned European Union trade war could DERAIL global economic recovery

Donald Trump warned European Union trade war could DERAIL global economic recovery

The west's leading economic thinktank has warned Donald Trump that a trade war prompted by USA protectionism threatens to derail a recovery in global growth to its highest level in seven years.

"Trade protectionism remains a key risk that would negatively affect confidence, investment and jobs", it said Tuesday. 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.

The OECD's latest Interim Economic Outlook has revised South Africa's growth rate expectations for 2018 and 2019 upward, on the back of positive sentiment around the economy and changes to the political landscape. With Britain due to leave the European Union next year, its economic growth was seen easing to 1.1 per cent in 2019, unchanged from the OECD's November estimate.

The think tank said United States tax cuts and spending increases, combined with fiscal stimulus in Germany, were the main reasons for the improved outlook. "Stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based". The OECD raised its eurozone growth forecasts for 2018 to 2.3% from 2.1% and raised its 2019 forecast to 2.1% from a prior 1.9%.

The OECD believes that monetary policy in advanced economies gradually will tighten at different speeds.

The United States is now projected to grow by 2.9% in 2018 and 2.8% in 2019.

"Safeguarding the rules-based global trading system is essential to prevent the longer-term harm to growth prospects that could arise from a retreat from open markets", it said.

Germany's economy will grow 2.4% this year (one tenth more than expected in November) and 2.2% in 2019 (two tenths more), the authors of the report say.

Mr Pereira added the introduction of the trade tariffs by the US President is not the right way of solving the problem of excess steel production and has urged the Trump administration to seek a collective solution through the OECD.

For the first time, OECD-wide unemployment fell in 2017 below its pre-crisis rate, the report said.

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