PARIS (Reuters) – The global economy will see its strongest growth in seven years in 2018 thanks to a rebound in trade and investment, the OECD said yesterday, while also warning a trade war could threaten the improved outlook.
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Updating its outlook for G20 economies, the Organisation for Economic Cooperation and Development raised its global growth forecast for both 2018 and 2019 to 3.9 percent – the highest since 2011 – from a previous estimate of 3.6 percent for both years.
The raised forecast was in part due to expectations that US tax cuts would boost the world’s biggest economy, it said.
“We think that the stronger economy is here to say for the next couple years,” acting OECD chief economist Alvaro Pereira told Reuters. “We are getting back to more normal circumstances than what we’ve seen in the last 10 years.”
Rebounding global business investment would keep global trade growth at about 5 percent this year, the OECD forecast.
However, it said the global economy was vulnerable to an eruption of trade tensions after the Trump administration slapped import tariffs on steel and aluminium.