Growth is dragged down by trade wars and Brexit

Roman Schwartz
March 9, 2019

That update saw growth expectations shaved from 3.7% at the previous economic update.

"Production continues to contract in Argentina, after the financial crisis that the country experienced past year and the subsequent hardening of fiscal and monetary policies", said the worldwide body.

Speaking at the organisation's headquarters in Paris on Wednesday, she said the slowdown in growth was a result of trade, weak financial markets and high inflation resulting from policy uncertainty globally and Brexit.

The outlook for Eurozone dropped 0.8 percentage point to 1 percent for 2019, reflecting the uncertainties related to Brexit and worsening economic sentiment, data showed.

The 19-nation eurozone looks set to be hit particularly hard, with anticipated growth dropping from 1.8 percent to one percent.

The economy contracted an estimated 2.5 percent in 2018, according to the OECD's preliminary figures.

It also warned a disorderly Brexit "would raise the costs for European economies substantially".

G20 growth forecast is lowered from 3.7% to 3.5% in 2019.

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The OECD revised growth downwards in nearly all of the countries in the G20 group of industrialised and emerging nations.

Booming exports should buoy the economy to see a 2.3-percent growth in 2020, the OECD said.

However, the OECD emphasised that even this projection was based on the assumption of a smooth Brexit.

The OECD says the economic prospects are now weaker in almost all G20 nations than previously anticipated. Diplomats said talks in Brussels on Tuesday, led by British Prime Minister Theresa May's chief lawyer, Geoffrey Cox, failed to find common ground, with barely over three weeks to go before Britain's scheduled departure on March 29. Meanwhile, British trade minister Liam Fox said on Wednesday the United Kingdom government had reached an internal agreement on import tariffs in case of a no-deal Brexit, declining to give details.

China's growth is also projected to moderate gradually to 6% by 2020, the OECD said.

But the OECD warned that "a sharper slowdown in China would hit growth and trade prospects around the world".

Laurence Boone, OECD chief economist, said: "Growth in Europe has been particularly disappointing, as trade growth both within the European Union and with external partners has stalled".

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