Major Global Growth Forecast Plunges to Lowest Level Since Financial Crisis
The Organisation for Economic Co-operation and Development (OECD) forecast of global gross domestic product and growth nation by nation has just hit the lowest level since the financial crisis. The headline of the new analysis, called the Interim Economic Outlook, last posted in May, is “OECD sees rising trade tensions and policy uncertainty further weakening global growth.”
The weakness is widespread, the analysis shows, which means it is evident in both advanced and emerging economies. The specific numbers for global GDP growth are for 2.9% this year and 3.0% in 2020. Those nations with the largest GDP revisions that are lower than in May are those with the most exposure to trade wars.
Before providing the national figures, OECD Chief Economist Laurence Boone said, “The global economy is facing increasingly serious headwinds and slow growth is becoming worryingly entrenched. The uncertainty provoked by the continuing trade tensions has been long-lasting, reducing activity worldwide and jeopardising our economic future. Governments need to seize the opportunity afforded by today’s low interest rates to renew investment in infrastructure and promote the economy of the future.”
The revision in U.S. growth pegs it at 2.6% this year. That is down from 2.8% in 2018. For 2020, the expectation is 2.0%, which is well below administration forecasts. The world’s second-largest economy, China, should have substantial slowing, to 6.1% this year and 6.0% next. The Chinese economy has grown by over 7% for most years in the past two decades. India, the largest of the less mature emerging economies also is expected to show a sharp deceleration in growth to 5.8% this year and 6.0% in 2020. Its recent growth rate has been 7% a year or better. India is also one of the nations with the fastest-growing populations.
In some nations, the OECD is forecasting recessions. First of these is deeply troubled Argentina, which is near default on its sovereign bonds. The OECD expects a drop of 2.7% in GDP this year and 1.8% next. Turkey’s economy is expected to fall 0.3% this year then recover to an increase of 1.6% in 2020.
Overall, the revisions having been pushed downward in almost every nation suggests that the world’s economy is in trouble again.