Trade Tariffs, Increased Interest Rates To Slow Down Global Economic Growth

Trade Tariffs, Increased Interest Rates To Slow Down Global Economic Growth

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According to the recent forecasts from the OECD (Organisation for Economic Cooperation and Development), the extended trade conflicts and growing interest rates would keep on slowing down the global economy next year. But the Paris-based organization does not see any recession on the perspective.

Global growth would be stagnant from a predicted 3.7% this year to 3.5% in 2019 and 2020, which is less from an earlier forecast of 3.7% for 2019. The slowdown is estimated to strike hardest in developing economies since rising interest rates decrease in investment in countries like Russia, Brazil, South Africa, and Turkey. Laurence Boone—the OECD’s Chief Economist—stated to Reuters, “We are revisiting to the long-term trend. We are not anticipating a hard landing; however, there are a lot of risks. An easy landing is always difficult.” Trade amid the U.S.-China has reduced after a tit-for-tat escalation in taxes by Washington and Beijing. The impeded Brexit negotiations over UK’s alarming departure from the EU (European Union) have also increased insecurity about the effects on trade flow between the U.K. and the EU. According to the latest OECD estimates, an escalation of trade disputes could trim GDP growth globally by almost 0.8% by 2021.

Recently, the OECD was also in news for stating that Australian households could deal with rate hikes within 2 Years. But only if incomes growth rises as estimations of a global slowdown could prove even bad if US-China trade spat escalates. The report predicts Australia’s economic growth will be sluggish, from 3.1% this year to 2.9% next year, and 2.6% by 2020. It also predicts lower global growth owing to increased instability and uncertainty, in particular to the U.S.-China trade war. In spite of the subdued growth, income would increase and Australia’s unemployment rate would fall. This will cause in monetary policy tightening, which means rate rises within 2 Years.