Increasing protectionism dampens the world economy, which will grow in the next few years less than in the past. This is the view of the OECD, a Club of rich countries, in its latest economic Outlook.
The global economy is expected to grow in the next two years to 3.5 percent, stated in the on Wednesday in Paris, published economic Outlook. At the end of the year, it should give still to 3.7 percent.
In early summer, the organization was still 3.7 percent for 2018 and 2019. “The world economy is moving in troubled waters,” said OECD chief economist Laurence Boone. “Global growth is strong, has reached its peak.”
In the United States and other major economies, the situation in the labour market, while still good, however, trade and investment would develop because of the higher duties to be weaker. US President, Donald Trump had introduced special duties on numerous products, particularly in the trade dispute with China is still no end in sight.
Trade dispute creates uncertainty
“Trade, conflicts and political uncertainty make governments harder to achieve a strong and sustainable growth for all,” said Angel Gurria, head of the Paris-based Organisation for economic co-operation and development (OECD).
OECD chief Angel Gurria
There are other risks: capital outflows from emerging markets could increase, because in the United States, the interest rates rise. A downturn in China is likely to beat in addition, also in the industrialized countries.
“Policy makers will be prudent to act to ensure a sustainable, albeit slower economic growth,” said Boone, which calls for international cooperation.
More consumption in Germany
For Germany, the organization is expecting slightly weaker growth than in the last Outlook in June. Accordingly, the gross domestic product of the largest economy in Europe will be in this year and next year at 1.6 percent. In 2020 there will be 1.4 per cent. Trade-related uncertainty and a slowdown in world demand, exports will be a burden,” said the OECD. In contrast, consumption is expected to grow.
At the same time, the OECD expects private consumption in Germany to rise because wages have risen strongly. The often criticized Surplus in the German current account balance “will decrease due to the stronger domestic demand, the imports of buoyancy,” says the OECD.
The organization also praises the planned investment of the Federal government in infrastructure and digital technologies, but warns of too-high real estate prices in the urban areas. “For households with low and middle incomes”, it was “increasingly difficult in the booming cities to find affordable housing,” – said in the report. The Federal government introduced baukinder money to heat this development, criticize the OECD-researchers.
Italy and the UK
For the Euro-Zone, the OECD lowered its forecast for the current year to 1.9 per cent and expects a further slowdown to 1.8 in the coming year and to 1.6 percent in 2020.
Particularly bad Italy to cut: Here, the organization expects in the next two years, only a Plus when the gross domestic product of only 0.9 percent. “The increasing uncertainty and the higher interest rates will dampen the propensity to consume of households and the Investment activity of the companies,” said the OECD to Italy.
Also in the UK, the economy is likely to be weaker than in the Euro-Zone. “The Brexit-related uncertainty inhibits economic growth”, – said the OECD.
“In the short term, by far the biggest risk is that the United Kingdom was not able to agree with the European Union on a withdrawal agreement.” The growth is expected to be in this year at 1.3 percent, in 2019, at 1.4 percent in 2020 to 1.1 percent.
Growth in USA and China flattens
Also in the world’s largest national economy, the USA will decrease the growth For this year, 2.9 per cent are forecast, in 2019, then 2.7 per cent and 2.1 per cent.
“The recent tax reform and the favorable financial conditions do not allow for 2019 and 2020, a high level of business investment can be expected”, – stated in the Outlook. “The weaker Outlook for the world economy and the already established trade measures strain, by contrast, economic activity.”
In China, the OECD sees a growth of 6.6 percent this year and 6.3 percent next year. Here, too, the growth flattens out, for 2020 and 6.0 percent are expected.
bea/hb (reuters, OECD)