The trade war between the United States and China has plunged global growth to its lowest levels in a decade, a worldwide economic organization said on Thursday as it slashed its forecasts.
The Organization for Economic Cooperation and Development (OECD) said that the global economy risked entering a new, lasting low-growth phase if governments continued to dither over how to respond.
The OECD went on to say the global economy will see its weakest growth since the 2008-2009 financial crisis this year, slowing from 3.6% last year to 2.9% this year before a predicted 3.0% in 2020.
The Paris-based policy forum said the outlook had taken a turn for the worse since it last updated its forecasts in May, when it estimated the global economy would grow 3.2% this year and 3.4% in 2020.
Trade growth, which had been the motor of the global recovery after the financial crisis had fallen from 5% in 2017 into negative territory now.
Meanwhile, trade tensions have weighed on business confidence, knocking investment growth down from 4% two years ago to only 1%.
The OECD said that there was evidence that the trade standoff was taking its toll on the U.S. economy, hitting some manufactured products and triggering farm bankruptcies.
The world’s biggest economy would grow 2.4% this year and 2.0% next year instead of the 2.8% growth this year and 2.3% growth next, that the OECD had forecast in May.
