Global economic growth has passed its peak, says OECD

Global economic growth has already peaked and is set to slow in the coming years, according to the latest forecast from the Organisation for Economic Co-operation and Development (OECD).

The organisation blamed the slowdown on rising global trade tensions, which have predominantly been initiated by US president Donald Trump and his administration.

The world economy is expected to expand by 3.7% this year, but the following two years will see a modest slowdown to 3.5%, the OECD said in its downgraded forecast.

“Trade conflicts and political uncertainty are adding to the difficulties governments face in ensuring that economic growth remains strong, sustainable and inclusive,” said OECD secretary-general Angel Gurria in a statement.

Trade tensions have already shaved between 0.1 and 0.2 percentage points from global GDP this year, according to the forecast.

The OECD estimates that if the US hikes tariffs on all Chinese goods to 25%, world economic growth could fall to close to 3% in 2020, instead of 3.5%.

Gurria seemed to direct his comments at the Trump administration when he called on “policy-makers to help restore confidence in the international rules-based trading system.”

Growth forecasts for next year were downgraded for most of the world’s major economies.

Australia is expected to see the strongest growth of all major developed economies next year at 2.9%.

Forecasts for the US were unchanged, with growth of 2.9% in 2018, then a slower rate of 2.7% in 2019, followed by an even slower 2.1% growth rate in 2020.

The UK, which is struggling with uncertainty over Brexit, is set to grow by 1.3% this year and 1.4% next year, according to the forecast. The OECD boosted its expectations for the UK economy next year, but it remains one of the slowest growing major economies in the world. UK growth in 2020 is expected to hit just 1.1%.