OECD warns against further protectionism, trims world GDP forecasts

The Organisation for Co-operation and Development has trimmed its forecasts for world growth for this year and next, cautioning that trade tensions, tighter financial conditions in emerging markets and political risks might further undermine "strong and sustainable" medium-term growth around the world.

According to what is often dubbed the rich world's economic watchdog, "escalating trade tensions, tightening financial conditions in emerging markets and political risks could further undermine strong and sustainable medium-term growth worldwide."

In its Interim Economic Outlook, the OECD trimmed its forecasts for the rate of growth in global gross domestic product in 2018 and 2018 by one and two tenths of a percentage point respectively, to 3.7% in both instances.

It also trimmed its projections for euro area GDP growth for each of those two years by two tenths of a point to 2.0% and 1.9%, respectively.

"Trade growth has stalled, restrictions are having marked sectoral effects and the level of uncertainty on trade stances remains high. It is urgent for countries to end the slide towards further protectionism, reinforce the global rules‑based international trade system and boost international dialogue, which will provide business with the confidence to invest," OECD chief economist Laurence Boone said.

"With tighter financial conditions creating stress on a number of emerging economies, especially Turkey and Argentina, a strong and stable policy framework will be key to avoid further turbulence."