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.