OECD says
Global economic growth is slower than expected a few months ago, as the Trump administration continues to fall from the trade war, the OECD said on Tuesday, and Canada is among the countries where the recession is the most concentrated.
The Economic Cooperation and Development Organization (OECD) modified its approach, trimmed its estimates from March for an increase of 3.1 percent this year and 3.0 percent next year. The global economy is slower by 3.3 percent last year, which has increased to 2025 and 2.9 percent in 2026 last year.
The Paris-based organization said in its latest economic perspective, “The recession is concentrated in the United States, Canada, Mexico and China, expected to see small below adjustments with other economies.”
If protectionism increases, the attitude of development to promote inflation, disrupt supply chains and to brighten financial markets will be even weaker.
OECD general secretary Mathius Cormon said, “Trade obstacles or excess increase in policy uncertainty will reduce the possibilities of development and will push inflation high in countries applying tariffs.”
If Washington increased bilateral tariffs by an additional 10 percentage points on all countries, as compared to rates in mid -May, global economic production would be about 0.3 percent less after two years, Cormon said.
“Major policy priorities in this context are creative dialogues to ensure a permanent resolution for current trade stress,” Cormon said.
The main political correspondent speaks with a pre -acting sub -commercial business representative about the latest updates in Rosemary Barton American Trade War. In addition, what does it mean for the mayor of London, Ontaris, Canadian municipalities. And, the American Round Table breaks that may come forward.
Canadian economic growth may slow down by 1% this year
The OECD project that the Canadian economic growth will slow down by 1.5 percent in 2024, 1.0 percent in 2025 and 1.1 percent in 2026, due to trade tension with the US, is its largest export market.
The organization also hopes that trade investment and exports will decline this year, and that a weak labor market will weigh the expense behavior of Canadian homes.
The headline inflation will be slightly tick, although the impact of high tariffs on consumer prices will be partially offset by low gas prices, which is responsible for the end of the organization consumer carbon tax.
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It also notes that core inflation – Favorite measures for the price hike of Bank of Canada – will increase “for a period” before the central bank returns to two percent target next year.
“Inflation pressure from high tariffs will require a more cautious approach to reduce interest rates,” the report said. Currently this rate is 2.75 percent, with the next meeting of the bank for Wednesday.
“Increase in government spending, especially housing strength and new social programs, recently spoiled the balance of the general government, although it was in the first surplus.”
OECD warns about tariff effects in America
Since assuming office in January, US President Donald Trump’s tariff announcements have rescued financial markets and promoted global economic uncertainty, forcing him to walk on some of his early stance.
Last month, the United States and China agreed to a temporary Trus to return the tariff, while Trump also postponed 50 percent of the duties on the European Union by 9 July.
The OECD’s forecast of the US economy will increase only 1.6 percent this year and 1.5 percent next year, with the aim of calculating that the tariff will be through 2025 and the rest of 2026 in the middle of May.
For 2025, the new forecast marked a major cut, as the organization earlier expected that the world’s largest economy would increase by 2.2 percent this year and 1.6 percent next year.
While the new tariffs can create encouragement for construction in the United States, high import price will squeeze the purchasing power of consumers and the economic policy will retrieve corporate investment, OECD warned.
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Meanwhile, high tariff receipts will only partially offset lost revenue due to the 2017 Tax Cuts and Jobs Act, new tax deduction and expansion of weak economic growth.
Trump’s comprehensive tax deduction and spending bills were expected to increase the US budget deficit by eight percent of economic production by 2026 – amidst the greatest fiscal decrease for the developed economy in the war.
As under pressure from tariffs fuel inflation, the US Federal Reserve was seen holding the rates through this year and then the rate of Fed Fund was cut from 3.25 to 3.5 percent by the end of 2026.
The OECD stated that in China, the decline from the US Tariff Hike will partially be offset by government subsidy for a business-in program on consumer goods such as mobile phones and equipment and will increase welfare transfer.
It estimated the second largest economy in the world, which is not an OECD member, growing 4.7 percent this year and 4.3 percent in 2026, 4.8 percent in previous forecasts in 2025 and 4.4 percent in 2026.
The approach to the Euro region was unchanged from March, this year the development forecast was 1.0 percent and 1.2 percent, the next year was increased by a reduction in flexible labor markets and interest rates, while more public spending from Germany would increase by 2026.
