US-China trade war of attrition could slow global economic growth to 2016 levels, says OECD
- International forum’s biannual report says economies will benefit in 2020 – if Beijing and Washington settle their differences without resorting to tit-for-tat tariffs
Economic growth in China and the United States could be 0.2-0.3 per cent lower on average by 2021 and 2022 if they do not pull back on tit-for-tat tariffs in a dispute that has dampened the global economic outlook, the OECD said on Tuesday.
US President Donald Trump has raised tariffs on US$200 billion of Chinese imports to 25 per cent from 10 per cent in the 10-month trade row, while Beijing said it would retaliate by increasing tariffs on US$60 billion of US goods.
In its biannual Economic Outlook, the Organisation for Economic Cooperation and Development said the global economy would grow by 3.2 per cent this year as growth in trade flows nearly halved.
That would be the slowest pace of global economic growth since 2016 and down marginally from the Paris-based policy forum’s forecast in March for growth of 3.3 per cent.
The world economy should fare slightly better next year with a growth rate of 3.4 per cent, but only if the US and China pull back from tariff increases announced this month.
Without taking the latest round of tariff increases into account, the OECD forecast the US would outpace other big, developed economies with growth of 2.8 per cent this year, up from the 2.6 per cent the organisation had projected in March.