OECD urges world to play by trade rules as tariff row rages

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The Organization for Economic Co-operation and Development (OECD) has released its interim economic outlook for global growth for 2018 and 2019.

The world's largest economy is expected to grow 2.9 percent this year and 2.8 percent next year.

However, the report also warned that "an escalation of trade tensions is a serious risk" following Trump's decision to introduce tariffs on steel and aluminium imports.

The OECD predicts the fastest world growth since 2011 this year, helped by United States tax cuts and spending in Germany.

Britain, however, was seen missing out on the global upturn, lagging all other G20 countries with growth of only 1.3 per cent this year, although up from a November forecast of 1.2 per cent due to the broader global improvement. The projection for this year was revised up from 3.7 percent and that for 2019 from 3.6 percent.

In 2019 global growth will stay at 3.9% but the United Kingdom will slow to 1.1%, leaving Britain equal with Japan and trailing all other G20 countries, the OECD forecast.

The raised forecast was in part due to expectations that U.S. tax cuts would boost the world's biggest economy, it said. However, trade barriers could hurt the progress made in jobs, growth and recovery.

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U.S. economic growth is tipped for a rise from 2017's 2.3% to 2.9% this year and 2.8% in 2019, on the back of tax cuts and spending increases under President Donald Trump.

The German rise will be slightly higher than that of the euro area as a whole, with a forecast increase of up to 2.3% in 2018 and 2.1% in 2019 (two tenths more in both cases).

The OECD appeared to take another jab at Trump - again, without naming him - saying that governments should avoid fiscal policy choices that are "excessively pro-cyclical", meaning further heating up an economy already firing on all cylinders.

While the global outlook had not quite returned to pre-economic crisis levels, stronger investment and improved global trade were nonetheless signs that the world economy is definitely on the mend a decade after the worst recession since the Great Depression of the 1930s.

Economists put Britain's growth at an annual pace of 1.5% over the next two years.

"Safeguarding the rules-based worldwide trading system is essential to prevent the longer-term harm to growth prospects that could arise from a retreat from open markets", it said.

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