Potential trade war threatens global economic growth, OECD warns

OECD says tax cuts in the US will boost business investment and could add as much as 0.75 percentage point to growth this year and next in the world’s largest economy

In its quarterly report, the Paris-based research body said it expects growth to ease off in some of those economies this year, but not by as.

"Backed by the global trade recovery, minimum wage hike, and household income expansion, South Korea's economic growth will remain at 3 percent in 2018-2019", the OECD report said, retaining its former forecast for Asia's fourth-largest economy.

An improved outlook for world economic growth will be placed at severe risk if a trade war results from United States metal tariffs, a report has warned.

The latest round of protectionism was triggered by USA steep tariffs on imported steel and aluminum.

The global economy will grow close to 4 per cent this year and next, better than previously anticipated, according to the OECD, which added a warning that a trade war could roll back the gains seen in recent years.

On its latest forecasts, the OECD said "stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based".

U.S. President Donald Trump last week formally signed proclamations to impose a 25-percent tariff on imported steel and a 10-percent tariff on aluminum, causing mounting dissent among business groups and trading partners around the world.

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Britain was seen missing out on the global upturn, lagging all other G20 countries with growth of only 1.3 percent this year.

But 2019 is unchanged at 1.1%, compared to the OECD's most recent forecast in November, and both years are down on the 1.7% growth recorded for 2017.

Last week, Stats SA reported higher than expected GDP growth for South Africa in 2017, showing that the economy grew by 1.3%, exceeding National Treasury's expectation of 1.0%.

The fastest growth this year will be India, with expansion of 7.2 per cent, followed by China at 6.7 per cent, and Turkey and Indonesia both at 5.3 per cent - all revised upwards since November.

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

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

"Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues".

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