The Organization for Economic Co-operation and Development is warning of a slowdown in most of the world’s largest economies, citing concerns about ongoing trade tensions, policy uncertainty and a decrease in business and consumer confidence.
In its Interim Economic Outlook released Wednesday, the OECD is forecasting 3.3 percent growth worldwide this year, down from 3.6 percent in 2018.
The report highlights lower estimates for China, the world’s second biggest economy, as well as those in Europe as the main stresses on the global economy.
It also says tariffs China and the United States have imposed on each other have hurt both economies and boosted inflation. Forecasts for the U.S. economy show it slowing from 2.9 to 2.6 percent growth.
“A sharper slowdown in any of the major regions could derail activity worldwide, especially if it spills over to financial markets,” said OECD Chief Economist Laurence Boone. “Governments should intensify multilateral dialogue to limit risks and coordinate policy actions to avoid a further downturn.”
The OECD slashed its expectations for the euro area from 1.8 percent last year down to 1 percent in 2019, with Germany’s growth expected to be cut in half and Italy expected to fall into negative growth this year.
Uncertainty about Britain’s exit from the European Union remains a weight on the economy there with individuals and business unsure of how the eventual resolution will affect them. The OECD projects Britain’s growth to be cut nearly in half this year, down to less than 1 percent.
Turkey is another major source of concern, with the OECD seeing that country’s economy plummeting from a nearly 3 percent growth rate in 2018 to a negative 1.8 percent rate this year.
“Financial markets have stabilized and external competitiveness has improved, but weak confidence, high corporate debt service burdens, tight monetary policy and soft demand in euro area markets still weigh on domestic and external demand,” the report says. It shows a Turkish recovery back to 3 percent next year.
Argentina and South Africa are rare bright spots among the projections in Tuesday’s report.
The OECD estimates Argentina to improve from a negative 2.5 percent growth rate to negative 1.5 percent his year, and to breach into positive territory in 2020. The report expects South Africa to double its growth to 1.7 percent in 2019.