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

OECD forecasts for growth in 2018 and 2019

OECD forecasts for growth in 2018 and 2019

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

The OECD also warned of risks linked to the Group of 20 countries having total debt amounting to over 200 per cent of economic output, and stock valuations being at their highest since the early part of the century.

The US economy, by contrast, is seen expanding by 2.9 per cent this year and 2.8 per cent next, helped by the simulative effect of tax cuts.

Updating its outlook for the G20, the OECD, which groups 34 of the world's leading economies, raised its global growth forecast for 2018 and 2019 to 3.9 percent - the highest since 2011 - from a previous estimate of 3.6 percent for both years.

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.

The higher forecast was in part due to expectations that US tax cuts would boost economic growth there, it said.

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"Growth is steady or improving in most G20 countries and the expansion is continuing", said OECD acting chief Economist Alvaro Pereira, "[But] an escalation of trade tensions would be damaging for growth and jobs". That's up from 3.7 per cent and 3.6 per cent respectively compared with its November projections.

The OECD blamed the UK's position on high inflation dampening consumer demand and continued uncertainty about Brexit.

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.

The eurozone economy will likely see a robust and broad-based expansion, with growth in gross domestic product estimated at 2.3 percent this year and 2.1 percent next year.

For South Africa, the OECD has revised the expected GDP growth rate upward to 1.9% in 2018, and 2.1% in 2019 - higher than the growth rate now targeted by National Treasury.

"The world economy will continue to strengthen over the next two years", the OECD said. The Paris-based organization had expected growth to be 1.2 percent in 2018 and 1.0 percent in 2019. "Safeguarding the rules-based worldwide trading system is key". "Governments of steel-producing economies should avoid escalation and rely on global solutions".

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