Trade tensions derailed global economy: OECD

Bloomberg

Trade tensions have derailed the global economy, plunging it onto a low-growth track that’s clouded by risks, according to the Organisation for Economic Co-operation and Development’s (OECD) latest outlook.
The report sticks to the gloomy tone long held by the Paris-based organisation, which has warned that trade disruptions could ricochet throughout the world economy. Now that scenario has come to pass,
with manufacturing production clobbered by tariffs, a sharp slowdown in investment, and confidence faltering.
The OECD also flagged other risks, including weakness in manufacturing infecting services, a bout of financial stress from high private debt, or faltering domestic demand in China. While there were small upgrades to its forecasts for the US and the euro area, they were completely overshadowed by the pessimistic mood of the report.
The OECD lowered its 2019 global forecast on Tuesday, to 3.2 percent from 3.3 percent.
“The outlook remains weak and there are many downside risks that cast a dark shadow over the global economy and pe-ople’s well-being,” Chief Economist Laurence Boone said. “Gro- wth is set to remain subpar as trade tensions persist, while co-ntributing to the divide between people,” Boone said. An index of global trade is already at a decade low, and a World Trade Organization (WTO) measure is signalling continued weakness this quarter. OECD also cut its forecasts for Japan and Canada, although raised them for the euro area and the US after a stronger-than-expected start
to the year.
The increasingly fragile situation is pressuring policy makers to urgently find a response.