The OECD on Thursday slashed nearly all of its forecasts for the global economy amid trade concerns tied to escalating protectionism.
The organization – whose tagline “Better policies for better lives” contrasts sharply with the Trump administration’s “Deranged jingoism for a miserable world” – said the global economy will expand at just 2.9% this year and 3% in 2020. Those are the weakest annual growth rates since the crisis.
“Escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide”, the OECD warned.
The malaise is widespread and the organization cautions that without decisive action, it could become endemic.
“Economic prospects are weakening for both advanced and emerging economies, and global growth could get stuck at persistently low levels without firm policy action from governments”, the new outlook says.
Chief Economist Laurence Boone isn’t particularly enamored with the plunge down the protectionist rabbit hole.
“The global economy is facing increasingly serious headwinds and slow growth is becoming worryingly entrenched”, Boone said. “The uncertainty provoked by the continuing trade tensions has been long-lasting, reducing activity worldwide and jeopardizing our economic future”.
Although it seems highly unlikely that Trump has signed up to get alerts when the OECD releases its latest projections, one imagines he wouldn’t be happy with the blame-casting from “Bonkers Boone” (or maybe “Loser Laurence”).
Hope for a breakthrough in the US-China relationship springs eternal, though, with next month’s principal-level discussions between Chinese Vice Premier Liu He, Bob Lighthizer and Steve Mnuchin circled on everyone’s calendar.
In the meantime, the market wants fiscal stimulus, and the OECD agrees.
“Governments need to seize the opportunity afforded by today’s low interest rates to renew investment in infrastructure and promote the economy of the future”, Boone declared.
The situation, the OECD emphasized, is “urgent” and monetary policy alone is not enough.
And…..cut to Larry “Growth Growth Growth” Kudlow to make an appearance refuting these claims of slowing global growth. Kudlow’s medicine for the US was tax cuts to juice his “Goldilocks Economy”. He got his tax cuts which did little for the economy while. Now we know he’s just fine inhaling Trump’s passed gas. Good job, Larry
It is likely there will be low growth ahead, but fiscal stimulus is about the worst solution in this catch-22. The problem is hoarding and m2 velocity and the embedded lack of investment in real long-term stuff. Our world currently thrives on short-term hyper fluid short term bets on synthetic derivatives, which end up generating profits for more and more billionaires, who don’t create anything but personal wealth, which is recycled into more short-term bets that drain growth from the people of Earth. Providing banks with more money to hoard will help to keep interest rates and inflation lower and continue to make long-term investment a dumb concept for anyone thinking about saving pennies from their huge increase in wages. The OECD is simply a group of people that like to have picnics and pretend they have a message that amounts to more than a pile of dead ants on a poisoned apple.
“Deranged jingoism for a miserable world” this one lit me up