OECD Lifts Global Growth Outlook Despite Trade War Concerns

Global economy is set to expand at a robust pace this year and next, but trade tensions could threaten sustainable growth, the Organisation for Economic Co-operation and Development said in its latest Interim Economic Outlook, released Tuesday.

The Paris-based think tank said the global economy will grow 3.9 percent in both 2018 and 2019. The projection for this year was revised up from 3.7 percent and that for 2019 from 3.6 percent.

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

"Growth is steady or improving in most G20 countries and the expansion is continuing," OECD acting Chief Economist Alvaro Pereira said.

Further, Pereira cautioned that an escalation of trade tensions would be damaging for growth and jobs.

"Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues," he said. "Safeguarding the rules-based international trading system is key."

The OECD forecast the United States growth of 2.9 percent this year, before slowing to 2.8 percent next year.

Tax reductions and higher government expenditure reinforce the momentum in domestic demand from strong confidence, solid job creation, past gains in household wealth and the rebound in oil production, said OECD.

Growth in the euro area is set to remain robust and broad-based. The currency bloc is forecast to grow 2.3 percent in 2018 and 2.1 percent in 2019.

GDP growth in the United Kingdom is projected to ease to 1.3 percent this year and 1.1 percent in 2019.

Japan's growth pace is set to remain at around 1.5 percent in 2018 before easing to around 1 percent in 2019, supported by improved export growth, especially in Asian markets, and the additional spending announced in the recent supplementary budget, OECD said.

Growth surprised on the upside in China in 2017, helped by a strong rebound in exports, but is set to soften to 6.7 percent this year and to 6.4 percent by 2019, the OECD said.