Published: Tue, March 13, 2018
Finance | By Claude Patterson

S. Korea to maintain 3% growth for 2018-2019: OECD

S. Korea to maintain 3% growth for 2018-2019: OECD

An escalating trade war is one of the only things standing in the way of the global economy growing at its fastest pace since 2010 this year and next, according to the influential Organisation for Economic Co-operation and Development (OECD).

The OECD projects that the global economy will grow by 3.9% in both 2018 and 2019, with private investment and trade picking up on the back of strong business and household confidence. Trade protectionism, however, remains a "key risk" to the world economy, according to the report.

The OECD's acting chief economist said any trade war resulting from US President Donald Trump's planned import duties on steel and aluminium products, would prove "fairly damaging".

The OECD forecast the US economy would grow 2.9 percent this year and 2.8 percent in 2019, with tax cuts adding 0.5-0.75 percentage points to the outlook in both years.

For South Africa, the OECD has revised the expected GDP growth rate upward to 1.9% in 2018, and 2.1% in 2019 - higher than the growth rate now targeted by National Treasury.

Robust exports to Asia and the effect of a supplementary budget for fiscal 2017 through March will help support Japan's economic growth, the OECD said as it lifted its forecasts for the world's third biggest economy also for both years. That was higher from a November forecast of 1.2 percent due to the broader global improvement.

With tax cuts boosting the economy this and next year, the OECD forecast the upper bound of the target federal funds rate could reach 3.25 percent by the end of 2019 from 1.5 percent now. The OECD, which groups 35 developed economies, called on the world's major nations to avoid a dispute that could impede trade, demand, competition and, ultimately, the health of the global economy.

The OECD said higher inflation in the United Kingdom would continue to squeeze household incomes.

Growth in France is expected to hit an 11-year high of 2.2 per cent this year before easing to 1.9 per cent in 2019.

In Germany, growth is seen coming it at 2.4 per cent this year and 2.2 per cent next, up from 2.3 per cent and 1.9 per cent previously. "Safeguarding the rules-based global trading system is key".

"Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues".

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