Global expansion is likely to slow as tensions kickstarted by US President Donald Trump's protectionist policies hit world trade, the Organisation for Economic Cooperation and Development (OECD) said today.
"Global GDP growth remained solid in the first half of 2018, at around 3.75 percent, but there are signs that the expansion may have now peaked," the OECD said.
In a report titled High Uncertainty Weighing on Global Growth, the OECD said it now expected growth to settle at 3.7 percent in 2018 and 2019 -- down 0.1 and 0.2 points respectively from its May projections.
Among the factors hurting growth are slowing trade expansion, which slipped from five percent in 2017 to around three percent in the first half of 2018, the report said.
The drop comes as Trump's "America First" approach has brought trade conflicts with China, the world's second largest economy, while also raising the pressure on its European trading partners.
Trump this week announced another US$200-billion worth of goods for his latest volley in the stand-off with Beijing, threatening even more tariffs could be in the pipeline if China doesn't play ball.
The new measures add to the $50 billion worth of goods already targeted, taking the total to about half of China's exports to the US.
Impact on living standards
The OECD report warned that the trade tensions are leading to a rise in uncertainty that is hurting both advanced and emerging market economies.
"A further rise in trade tensions would have significant adverse effects on global investment, jobs and living standards," the report said.
The report expressed particular concern about nations whose currencies have collapsed in recent months.
According to the OECD, Argentina's economy should contract 1.9 percent this year (a fall of 3.9 percentage points compared to previous forecasts), while growth in Turkey is seen coming in at home 3.2 percent.
The OECD pointed to strong job growth particularly in advanced economies, but also noted that "wage growth... remains moderate" – leaving low-income households particularly vulnerable.
It also said that the tariffs are already having a palpable impact in some sectors.
In the US, "imports of washing machines, solar panels and steel and aluminium all began to decline in value terms in the first half of the year", the report said, adding that "US domestic prices have risen sharply in the affected sectors."