OECD: Trade Disputes Are Weakening Future Growth

By WSJ City

Conflicts between the US and its major trade partners have weakened business investment around the world, threatening to hamper future as well as current rates of economic growth, the Organization for Economic Cooperation and Development said on Tuesday.

"It's something that's super worrying. The less we invest today, the more we will be missing in the future." Laurence Boone, the OECD's chief economist.

KEY FACTS

   -- The OECD said tariffs have been largely responsible for a slowdown in 
      global growth since 2017. 
 
   -- It warned that uncertainty about the extent and duration of trade 
      disputes is holding back business investment. 
 
   -- That's harming longer-term growth prospects. 
 
   -- The OECD estimates global business investment will grow at an average 
      rate of 1.75% this year and next. 
 
   -- That's down from 3.5% in 2017 and 2018. 
 
   -- It said lower spending on tools and equipment is contributing to a 
      slowdown in trade flows.

Expectations

The OECD slightly raised its growth projections for the US, eurozone and the UK. It left its figures for China unchanged, and lowered its projections for Japan. But those forecasts were finalised before the US raised tariffs on $200bn of Chinese goods to 25% from 10%.

The OECD said that, if kept in place, those new tariffs would shrink the US and Chinese economies by 0.2% or 0.3% by 2021, while U.S. consumer prices would be 0.3% higher in 2020 than they would have been without the new duties. It said further tariff increases would deepen the damage.

A fuller story is available on WSJ.com

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(END) Dow Jones Newswires

May 21, 2019 06:35 ET (10:35 GMT)

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