United Kingdom growth to be slowest in G20 this year, says OECD

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

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

It said that the tax cuts in the US will boost business investment and could add as much as 0.75 percentage point to growth this year and next in the world's largest economy.

Global economic growth accelerated a year ago as higher investment and falling unemployment drove pickups in most major economies.

Growth will particularly be powered by private investment and trade picking up on the back of strong business and household confidence, the OECD said.

OECD Acting Chief Economist Alvaro Pereira observed: "In this environment, an escalation of trade tensions would be damaging for growth and jobs". Trade protectionism, however, remains a "key risk" to the world economy, according to the report.

It credited tax cuts in the United States, the world's largest economy, for much of the upgrade - though the global forum warned that protectionist policies were a big risk factor in the forecast.

Financial markets have been hit by fears of a trade war following U.S. President Donald Trump's move to slap tariffs on steel and aluminum imports.

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This is up from a forecast last November of 3.7% in 2018 and 3.6% in 2019.

With tax cuts boosting the economy this and next year, the OECD forecast the upper bound of the target federal funds rate could reach 3.25 percent by the end of 2019 from 1.5 percent now.

But 2019 is unchanged at 1.1%, compared to the OECD's most recent forecast in November, and both years are down on the 1.7% growth recorded for 2017.

In contrast, stronger growth in France and Germany boosted the outlook for the broader euro zone to 2.3 percent for this year and 2.1 percent in 2019. The OECD, which groups 35 developed economies, called on the world's major nations to avoid a dispute that could impede trade, demand, competition and, ultimately, the health of the global economy.

In its interim economic outlook report issued Tuesday, the organization forecast global economic growth for this year at 3.9 percent, up from its previous suggestion of 3.7 percent. "Governments of steel-producing economies should avoid escalation and rely on global solutions".

"Safeguarding the rules-based global trading system will help to support growth and jobs", it said.

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