OECD Warns on Effects of Protectionism as Global Trade Weak

A new wave of protectionism and trade tensions risks denting global growth, stoking inflation and harming living standards, the west’s leading economic thinktank has warned in its first in-depth forecasts since Donald Trump won the US election on an anti-globalisation platform.

The Paris-based Organisation for Economic Cooperation and Development said it was optimistic that expected spending measures and tax cuts under the new US administration would boost growth there and in other countries. But it said global trade growth was already “exceptionally weak” and jobs would suffer if politicians rolled back the clock on trade liberalisation.

The thinktank warned of an uncertain outlook for the UK and its trading partners as Brexit negotiations began. It nudged up its forecasts for UK growth next year but still predicted the weakest performance since the recession and a further slowdown in 2018.

The OECD used its quarterly forecasts to urge governments to use low borrowing costs to invest and enact structural reforms. The group reprised a warning to politicians not to over-rely on central banks to drive the recovery with monetary policies, such as low interest rates and electronic money-printing programmes.

It forecast that, after averaging 3.9% growth over the decade to 2013, global growth would be 2.9% for this year then edge up to 3.3% in 2017 and 3.6% in 2018.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza