UNITED STATES, WASHINGTON (OBSERVATORY) — The growth of the world economy in the coming years will be the weakest since the financial crisis of 2008 due to a trade war between the US and China, which negatively affects trade and investment of companies, the Organization for Economic Cooperation and Development (OECD) said in a report.
At the same time, the OECD believes that the negative consequences of the trade conflict will only intensify.
The OECD predicts that in 2019 global economic growth will be 2.9%, the lowest rate since the 2008 recession.
The OECD also expects that 2020 and later growth will remain weak if the trade conflict between the US and China extends to other areas of economic cooperation. The organization noted that sales of US subsidiaries in China exceed US exports to China.
“What worries us most is that the slowdown is growing,” said OECD chief economist Lawrence Boone.
The organization is also worried that trade conflicts could spread to other countries, while Japan and South Korea are already in conflict with the United States, and President Donald Trump must decide whether to impose duties on car imports from the EU.
The OECD lowered its growth forecasts for the US and several other developed countries. According to the new forecast, this year US GDP will grow by 2.4%, and next year – by 2%. In May, growth was forecast at 2.8% and 2.3%, respectively. 2019 forecasts are further lowered for Mexico, Argentina, Brazil, India, Russia, Saudi Arabia and South Africa.
According to the OECD, the prospects are darkened not only by the US-Chinese conflict, although it is the largest and darkest. The organization also warned that in the event of a tough Brexit, UK GDP would be 2% lower than it would otherwise be, while EU GDP would be 0.5% lower. This will mean a recession in the UK, and the EU will be on its verge.
“This reinforces the prevailing uncertainty,” Boone told the Wall Street Journal.
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