OECD warns of global slowdown

Angel Gurria highlighted problems caused by trade conflicts and political uncertainty. (Photo: AFP/Eric Feferberg)

The OECD, which groups the top developed economies, said it had trimmed its growth forecast for 2019 to 3.5 per cent from the previous 3.7 per cent.

The 2018 estimate was left unchanged at 3.7 per cent.

For 2020, the global economy should grow 3.5 per cent, it said in its latest Economic Outlook report.

"The shakier outlook in 2019 reflects deteriorating prospects, principally in emerging markets such as Turkey, Argentina and Brazil," it said.

"The further slowdown in 2020 is more a reflection of developments in advanced economies as slower trade and lower fiscal and monetary support take their toll."

OECD chief Angel Gurria highlighted problems caused by trade conflicts and political uncertainty - an apparent reference to US President Donald Trump's stand-off with China which has roiled the markets.

"We urge policy-makers to help restore confidence in the international rules-based trading system," Gurria said in a statement.

Trade tensions have already shaved 0.1-0.2 percentage points off global GDP this year, the Economic Outlook report said.

If Washington were to hike tariffs to 25 per cent on all Chinese imports - as Trump has threatened to do - world economic growth could fall to close to three per cent in 2020.

Growth rates would drop by an estimated 0.8 per cent in the US and by 0.6 per cent in China, it added.

For the moment, the OECD puts US economic growth at 2.9 per cent this year and 2.7 per cent in 2019, unchanged from previous estimates, but trimmed China by 0.1 percentage point each to 6.6 per cent and 6.3 per cent.

It warned that "a much sharper slowdown in Chinese growth would damage global growth significantly, particularly if it were to hit financial market confidence."

Laurence Boone, OECD Chief Economist, said "There are few indications at present that the slowdown will be more severe than projected. But the risks are high enough to raise the alarm and prepare for any storms ahead."