A prominent think-tank says overall economic growth is set to slow down — and that includes Canada.
In its September outlook, the Paris-based Organisation for Economic Cooperation and Development (OECD) predicted that the expansion of the global economy “may now have peaked.”
The organization’s chief economist, Laurence Boone, delivered the near-term prospects Thursday, warning that world trade growth is beginning to plateau amid friction among countries.
“Export order books have also started to decline and that has been going on for a few months and what that means going forward is that the deceleration in trade growth will continue. So, I think that’s one of the most important points — it’s we are seeing the rise in protectionism biting on our growth outlook,” she told reporters.
The world economy is on course to grow 3.7 per cent this year and next year, up from 3.6 per cent last year, said OECD.
That’s slightly down from its previous economic outlook in May, which had forecast growth of 3.8 per cent this year and 3.9 per cent in 2019.
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The organization said trade growth, the engine behind the global upswing in recent years, had slowed this year to around three per cent from five per cent in 2017, as tensions between the United States and its major trade partners weighed on confidence and investment.
“Amidst rising trade tensions and heightened trade policy uncertainty, global trade growth has slowed.” the report read.
It added that U.S. import tariffs were beginning to have an impact on the world’s biggest economy, estimating that those already imposed would lift overall U.S. prices 0.3-0.4 per cent.
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For Canada specifically, OECD said Thursday that the country’s economy will grow two per cent next year — that’s down 0.2 per cent from its May projections.
“Strong U.S. demand continues to support exports, but higher borrowing costs have begun to check household spending growth and housing market pressures, and rising trade policy uncertainty could temper business investment,” the report said of Canada.
Other countries also had their growth projections slashed. U.S. growth forecast fell 0.1 per cent. Overall, the collective forecast for G20 countries tumbled 0.3 per cent.
Similar worries about trade were voiced by Bank of Montreal chief executive Darryl White in an interview with The Canadian Press.
White said that while the Canadian economy is showing positive growth in almost every province, one economic headwind worries him the most: trade.
“I fundamentally think it will come together,” White said of NAFTA. “But underlying that, it’s hard to predict some random events. And there are some random events.”
— With files from Reuters, The Canadian Press