OECD sees trade boosting global growth to 7-year high


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In its interim economic outlook report issued Tuesday, the organization forecast global economic growth for this year at 3.9 percent, up from its previous suggestion of 3.7 percent.

As downside risks, the report cited persisting gestures of trade protectionism, the normalization of monetary policies in key countries, demographic changes and a decrease in mid- and long-term investment.

The west's leading economic thinktank has warned Donald Trump that a trade war prompted by USA protectionism threatens to derail a recovery in global growth to its highest level in seven years.

"Growth is steady or improving in most G20 countries and the expansion is continuing", said OECD acting chief Economist Alvaro Pereira, "[But] an escalation of trade tensions would be damaging for growth and jobs".

Growth will particularly be powered by private investment and trade picking up on the back of strong business and household confidence, the OECD said.

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Against that backdrop, the Federal Reserve would probably have to raise interest rates four times this year as inflation picks up, Pereira said. That was higher from a November forecast of 1.2 percent due to the broader global improvement. Previously the OECD had estimated three hikes would suffice this year.

The OECD also revised up its forecasts for Germany and France, but remained gloomy about the prospects for Britain as it approaches the date for Brexit in March 2019.

President Emmanuel Macron's social welfare, tax and labour market reforms would help France narrow the gap with Germany, with growth forecast at an 11-year high of 2.2 per cent (+0.4) before easing to 1.9 per cent in 2019 (+0.2).

OECD now projects Canada's economy will expand by 2.2 per cent this year and 2 per cent in 2019. In its quarterly report, the Paris-based research body said it expects growth to ease off in some of those economies this year, but not by as. The body forecasts growth will slump to 1.2 per cent over the course of this year and 1.1 per cent in 2019, as the United Kingdom leaves the EU.

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