The OECD has revised down growth forecasts for this year and next for the majority of the world's 20 biggest economies.

US-China trade tensions and Brexit weaken economic growth

In its latest economic outlook, the Paris-based organisation said on Wednesday that global economic growth would continue to weaken this year amid trade tensions between the US and China, and because of the UK's departure from the European Union.The eurozone countries would experience the sharpest slowdown, said the OECD, with Germany and Italy suffering the largest downgrades in growth forecasts.

Italy and Germany suffer largest growth downgrades in eurozone

Globally, the organisation cut its forecast for this year by 0.2 per cent, down to 3.3 per cent. Next year, it expects growth to be 3.4 per cent.Those forecasts represent cuts of 0.2 percentage points for 2019 and 0.1 percentage points for 2020, compared to the OECD’s last set of forecasts in November.“High policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence are all contributing to the slowdown,” said the OECD.“Substantial policy uncertainty remains in Europe, including over Brexit. A disorderly exit would raise the costs for European economies substantially."The global economy is slowing and major risks persist, with growth weakening much more than expected in Europe."Economic prospects are now weaker in nearly all G20 countries than previously anticipated. Vulnerabilities stemming from China and the weakening European economy, combined with a slowdown in trade and global manufacturing, high policy uncertainty and risks in financial markets, could undermine strong and sustainable medium-term growth worldwide."

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Policy uncertainty, trade tensions and consumer confidence hit growth

The OECD, which is urging European states to borrow more to fund economic stimulus programmes, slashed its forecast for economic growth in Germany from the 1.6 per cent it was predicting last year, to 0.7 per cent. Italy's economy is expected to contract by 0.2 per cent this year.Both countries have been hit by a slowdown in China, whose growth forecast is down to 6.2 per cent this year and six per cent next. Meanwhile, the forecast for the US economy for this year has been only marginally trimmed to 2.6 per cent this year.

OECD warns no-deal coule lead to recession

For the UK, the organisation now expects only 0.8 per cent growth this year, down from its previous estimate of 1.4 per cent, and warns that a no-deal Brexit could plunge the country into recession."Although contingency measures to soften the impact of a no-deal outcome are being taken by both sides, UK-EU separation without an agreement would still be a major adverse shock for Europe and possibly elsewhere in the world, given that the United Kingdom is an important trading partner for many countries," said the report.Laurence Boone, senior economist at the OECD, said, “The global economy is facing increasingly serious headwinds. A sharper slowdown in any of the major regions could derail activity worldwide, especially if it spills over to financial markets."Governments should intensify multilateral dialogue to limit risks and coordinate policy actions to avoid a further downturn.”Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory

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