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People cross the intersection of SW 8th Steet and Brickell Ave at the Brickell neighborhood, known as the financial district, in Miami, Florida, US, February 23, 2023.—Reuters
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The Organization for Economic Cooperation and Development (OECD) said that the aggressive trade policies of US President Donald Trump have suddenly taken the world on the path of slow growth and more inflation, which can be especially worse if tensions increase.
The club of 38 rich countries based in Paris reduced their views for most members and predicted the global expansion speed this year to decrease 3.1 percent this year and 3.0 percent in 2026 as obstacles prevent trade and overthrow business investment and consumer costs.
Currently, trade storms can also see a sharp decline in countries, Canada growth is entering a recession in Mexico, less than the December prediction of the OECD, and as expected next year, after 2011, the increase in costs in 2020, the highest gains in 2011. The OECD said the banning policies longer. In many countries, including the United States, the basic price increase will be beyond the goals of policy makers in 2026.
This approach is still the most comprehensive effort by an international organization for the amount of loss from the rapidly developing trade war. Although the tension was expected to be eliminated after taking over as Trump, the volatility and size of his risks have made both policy makers and investors wrong. Last week, the US stock came into a correction with 10 % S&P 500 in mid -February. Trump has faced a “transition period” due to an attempt to strengthen global trade, but it rejected the threat of recession and created a riot in the market.
The OECD analysis is already a step between China and the United States, as well as 25 % of Washington’s wide -level revenue on Steel and Aluminum imports. It is also based on Levies by 25 % points on Canada and Mexico goods and equal retaliation from those countries.
None of Trump’s other threats are calculated, including a global mutual prices, or a proposal to target EU liquor with 200 % Levies last week.
An example of the OECD, according to counterfeit simulation, in which bilateral rates are permanently increased by 10 percent points, global production may decline 0.3 percent by the third year. It said the United States would take a “significant hit”, which would reduce production by 0.7 %.
In this scenario, inflation will also be strengthened, which indicates the tightening of central banks and gives rise to “interrupting” the financial markets. The OECD said such risks and uncertainty mean that financial officials should be vigilant for wages and prices pressure.
“More pieces of the global economy are an important concern, the organization said.” “The highest and wider growth in trade barriers will lead to growth worldwide and inflation will increase.”
Nevertheless, the OECD said that there are some risks to its sad approach, which should reduce the prices and the policy should be more stable. High defense spending, as Europe has promised in recent weeks, can also support development, though it will increase pressure on government financial matters.
For now, the European economies have a direct impact on trade wars, the OECD said. But it has still reduced the prediction of the region’s uncertainty. China should also be more flexible this year as the impact of revenue is eliminated with the help of domestic policy, but OECD is expected to decrease growth in 2026.
