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OECD: Global Growth Slowing Further, Hampered by Trade Disagreements

OECD: Global Growth Slowing Further, Hampered by Trade Disagreements

Uncertainty from the U.S.-China trade war and other international spats has squeezed global economic growth to its slowest level of growth since the recession of the late 2000s, the Organization for Economic Cooperation and Development said Thursday.

The OECD reduced projections from its last outlook in May, and now predicts the global economy will grow by just 2.9% in 2019 and 3% in 2020, which would be the weakest annual growth rates since 2009, when the financial crisis drove much of the world into recession. Earlier this year, the OECD was expecting growth above 3%.

Economic growth is weakening in both advanced and emerging economies, and without strong policy action to reverse the slide, it could be persistently low for some time, the organization said.

“Escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide,” the Paris-based OECD said in its latest outlook statement.

OECD economists see a shift in the global norms that had boosted international trade, which was a key engine of the international economy over the last decade.

“The uncertainty provoked by the continuing trade tensions has been long-lasting, reducing activity worldwide and jeopardizing our economic future,” OECD Chief Economist Laurence Boone said in a statement.

“Governments need to seize the opportunity afforded by today’s low interest rates to renew investment in infrastructure and promote the economy of the future.”

The OECD also revised its projection for U.S. economic growth downward, and now expects 2.4% growth in 2019 and 2% growth in 2020.

It also revised its projection for China, which has outpaced the rest of the world, saying the Chinese economy is now likely to grow by 6.1% in 2019, down from 6.6% in 2018.

Chinese economic growth is expected to slow to 5.7% in 2020, the OECD said.

India, which saw economic growth approaching 7% last year, can now expect that growth to slow to about 5.9% in 2019 and 6.3% in 2020, the OECD said.

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