United Kingdom growth to be slowest in G20 this year, says OECD

United Kingdom growth to be slowest in G20 this year, says OECD

Trade tensions are threatening the best global economic growth outlook in seven years, the OECD said on Tuesday, adding that four USA rate rises are likely this year as tax cuts stoke the world's biggest economy while Brexit will drag on Britain.

The OECD's latest Interim Economic Outlook has revised South Africa's growth rate expectations for 2018 and 2019 upward, on the back of positive sentiment around the economy and changes to the political landscape.

Rebounding global business investment would keep global trade growth at about 5 percent this year, the OECD forecast.

Alvaro Pereira, the OECD's acting chief economist, said: "US steel and aluminium tariffs will raise costs and harm consumers, while not solving the global overcapacity problem".

However, it warned that the recovery risked being undermined by an escalation in trade barriers that would hurt growth and jobs.

The world's largest economy is expected to grow 2.9 percent this year and 2.8 percent next year.

However, the growth rate is still very slow compared to other G20 nations, and well below the average for the group, which is expected at 4.1% in 2018 and 4.0% in 2019.

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With tax cuts boosting the economy this and next year, the OECD forecast the upper bound of the target federal funds rate could reach 3.25 percent by the end of 2019 from 1.5 percent now.

For South Africa, the OECD has revised the expected GDP growth rate upward to 1.9% in 2018, and 2.1% in 2019 - higher than the growth rate now targeted by National Treasury.

The Paris-based intergovernmental group said on Tuesday that it now anticipates the global economy to grow by 3.9 per cent both this year and next, from a previous forecast of 3.6 per cent for both years.

"The world economy will continue to strengthen over the next two years", the OECD said.

"Governments should avoid escalation and rely on global solutions to resolve excess capacity in the global steel industry".

The body's Interim Economic Outlook - released as Chancellor Philip Hammond was preparing to paint a hopeful picture of Britain's prospects in his spring statement - nudges predicted United Kingdom growth for 2018 up by a tenth of a percentage point to 1.3%.

"Safeguarding the rules-based global trading system will help to support growth and jobs", it said.

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