The global economy may weaken to a pace not seen since the financial crisis as the impact of the Trump administration`s trade war and Brexit erode confidence and investment, the Organisation for Economic Cooperation and Development said in a report.
Global economic growth is likely to slow to 2.9% in 2019 and 3% in 2020, the weakest annual growth rates since the 2008 financial crisis, the economic research organization said. The trade war between the U.S. and China as well as other trade tensions are "endangering future growth prospects," the group added.
Economic growth in the U.S. will slow to 2% next year, the OECD forecast. By comparison, the Trump administration has targeted 3% annual GDP growth.
The OECD`s latest outlook is a downgrade on the group`s 2018 forecast that global economic growth would reach 4% in 2019, OECD chief economist Laurence Boone wrote in a blog post. Trade disputes between the U.S. and China, Europe and other countries is causing some businesses to hold off on investing in new equipment or hiring, while U.S. manufacturing has fallen into recession despite President Donald Trump`s vows to revive the sector.
"An urgent response is required, failing which we run the risk of finding ourselves stuck in a long period of low growth, the brunt of which will be felt primarily by the most vulnerable," Boone wrote.
The outlook for economic growth has been revised downward for almost all G20 countries, the OECD said. The G20 includes the EU and 19 other countries, including the U.S., Canada and Mexico.
The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways (for example, in 2006 US dollars). It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth.
For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy - even if currently exploited in some way - and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention. Beyond the minimum standard of concerning value in production, use, and exchange on the planet Earth, definitions, representations, models, and valuations of the world economy vary widely.
It is common to limit questions of the world economy exclusively to Human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs and prostitution, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind.
for September 2019
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