OECD Sees Better Outlook, if Trade Escalation Avoided

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"Stronger investment, the rebound in global trade and higher employment are helping to make the recovery increasingly broad-based".

"The Outlook underlines the boost to short-term growth expected from new tax reductions and expected spending increases in the United States and expected fiscal stimulus in Germany, but also points out a number of financial sector risks and vulnerabilities, as well as those posed by a rise in protectionism".

It credited tax cuts in the USA, the world's largest economy, for much of the upgrade - though the worldwide forum warned that protectionist policies were a big risk factor in the forecast.

Upgrading its forecasts, the Paris-based group in part cited USA tax cuts for the better numbers.

The UK trails last out of the G20 economies in OECD growth projections for both 2018 and 2019, with Britain's rate of GDP increase declining in both years while many other countries surge ahead.

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".

Britain was seen missing out on the global upturn, lagging all other G20 countries with growth of only 1.3 percent this year.

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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.

With Britain due to leave the European Union next year, its economic growth was seen easing to 1.1 percent in 2019, unchanged from the OECD's November estimate.

"The world economy will continue to strengthen over the next two years", the OECD said.

The OECD blamed the UK's position on high inflation dampening consumer demand and continued uncertainty about Brexit.

The fastest growth this year will be India, with expansion of 7.2 per cent, followed by China at 6.7 per cent, and Turkey and Indonesia both at 5.3 per cent - all revised upwards since November.

"Safeguarding the rules-based worldwide trading system will help to support growth and jobs", it said. "Governments of steel-producing economies should avoid escalation and rely on global solutions".

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