The Organisation for Economic Co-operation and Development (OECD) yesterday warned that protectionist trade measures pose a major risk to the world economy, just weeks before US president-elect Donald Trump is to return to the White House next month.
The Paris-based OECD did not name Trump in its updated analysis of the world economy, but it was abundantly clear that the organization was warning about Trump’s possible tariff measures on US trading partners.
While the OECD raised its global growth forecast to 3.3 percent next year, it said that “greater trade protectionism, particularly from the largest economies” poses a “downside risk” along with geopolitical tensions and high public debts.
Photo: AFP
“Increases in trade-restrictive measures could raise costs and prices, deter investment, weaken innovation and ultimately lower growth,” the OECD said in its economic outlook.
“Further increases in global trade restrictions would add to import prices, raise production costs for businesses and reduce living standards for consumers,” it added.
A recent study by the Roland Berger consultancy calculated the cost of the US measures, and likely countermeasures by China and the EU, at more than US$2.1 trillion through 2029.
Trump is far from the only risk in terms of protectionist measures. A spat has also broken out between Brussels and Beijing after the EU imposed import tariffs on Chinese electric vehicles. China has retaliated with tariffs on EU brandy, including cognac.
The OECD sees the US economy expanding 2.4 percent next year, up from its September forecast of 1.6 percent growth. It also raised its forecast for the UK’s growth next year 0.5 percentage points to 1.7 percent due to higher public spending planned by the new Labour Party government.
China’s economy is expected to expand 4.7 percent next year, an increase of 0.2 percentage points, while India’s growth forecast was raised 0.1 percentage points to 6.9 percent.
However, France and Germany saw 0.3 percentage point cuts to their growth forecasts to 0.9 percent and 0.7 percent respectively, as both countries face political crises amid mounting fiscal pressure, the OECD said.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
RSS