Global economic growth is under threat from the escalating US-China trade conflict, the Organisation for Economic Co-operation and Development (OECD) has warned.
The OECD’s closely-watched Economic Outlook said if current tariffs between the two countries are maintained, they will shave between 0.2 and 0.3 per cent from US and Chinese GDP.
US President Donald Trump has ratcheted up tariffs on $200bn (£158bn) worth of goods from China to 25 per cent from 10 per cent and cracked down on Chinese companies such as Huawei.
The Paris-based OECD, which has 36 of the world’s richest countries as members, downgraded its prediction for global growth to just 3.2 per cent in 2019 from a 3.3 per cent prediction in March.
Slowing trade growth, weak manufacturing and low investment are to blame for the downgrade, the organisation said. It said jobs and services are the sectors supporting consumption and moderate growth.
World trade is projected to grow by just over two per cent in 2019, the lowest rate in a decade, the organisation said.
The US economy is a bright spot in an otherwise gloomy picture, with the OECD predicting growth of 2.8 per cent in 2019.
Britain’s growth prediction was considerably revised up to 1.2 per cent for 2019 from the OECD’s March prediction of 0.8 per cent.
Both the Japanese and German economies are predicted to grow by just 0.7 per cent in 2019.
The Economic Outlook report said that global growth is now “stabilising at a moderate level” after slowing sharply in late 2018.
However, the report said continuing trade tensions could damage growth, and called on governments to act now to increase international cooperation and multilateral dialogues to avoid further trade tensions.
“Growth is stabilising but the economy is weak and there are very serious risks on the horizon. Governments need to work harder together to ensure a return to stronger and more sustainable growth,” said Laurence Boon, OECD chief economist.