The world economy will grow more than previously forecast this year after absorbing the shock of US President Donald Trump’s tariffs, but their full impact remains uncertain, the Organisation for Economic Cooperation and Development (OECD) said yesterday.
In June, the Paris-based OECD had cut its forecast from 3.1 percent to 2.9 percent, warning at the time that Trump’s tariffs would stifle the world economy.
But in an updated outlook yesterday, it raised the projection to 3.2 percent, saying the economy “proved more resilient than anticipated” in the first half of this year.
Photo: AP
“The impact of tariffs is taking longer to reach the economy,” OECD chief economist Alvaro Pereira told AFP in an interview.
The OECD report said “front-loading” -- companies rushing to import goods ahead of Trump’s tariffs -- “was an important source of support”.
The economy also got a boost from strong artificial intelligence (AI)-related investments in the US and government spending in China.
The updated figure is still a slight slowdown from 3.3 percent last year.
“The full effects of tariff increases have yet to be felt -- with many changes being phased in over time and companies initially absorbing some tariff increases through (profit) margins,” the OECD said.
“But (they) are becoming increasingly visible in spending choices, labor markets and consumer prices,” it said.
World growth is due to slow to 2.9 percent next year “as front-loading ceases and higher tariff rates and still-high policy uncertainty dampen investment and trade,” the OECD said.
The overall effective US tariff rate rose to an estimated 19.5 percent last month, the highest level since 1933, it said.
“Significant risks to the economic outlook remain,” the OECD said.
“Amid ongoing policy uncertainty, a key concern is that bilateral tariff rates could be raised further on merchandise imports,” it said.
The OECD also warned that inflation could rise as food and energy prices climb, and companies begin to pass the cost of higher tariffs to consumers.
“On the upside, reductions in trade restrictions or faster development and adoption of artificial intelligence technologies could strengthen growth prospects,” it said.
The OECD also upgraded the growth outlook of the US for this year from 1.6 percent to 1.8 percent but that is much slower than 2.8 percent last year.
US growth is expected to slow even further to 1.5 percent next year due to higher tariffs and elevated “policy uncertainty.”
The OECD also pointed to the impact of Trump’s immigration crackdown and cuts in the federal workforce.
The report was written before the White House raised the H-1B visa fee for high-skilled workers to US$100,000, which has rattled the tech industry.
“We do think that continuing to attract high-skilled individuals from the United States or from around the world is a key strength of the US economy,” said Pereira, noting that there is a labor shortage in the tech sector.
The OECD raised the growth outlook of other major economies: to 4.9 percent in China, 1.2 percent in the eurozone and 1.1 percent in Japan.
But it flagged a drop in industrial production in recent months in several countries, including Brazil, Germany and South Korea, and moderating consumption in the US, China and the eurozone.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
AI TALENT: No financial details were released about the deal, in which top Groq executives, including its CEO, would join Nvidia to help advance the technology Nvidia Corp has agreed to a licensing deal with artificial intelligence (AI) start-up Groq, furthering its investments in companies connected to the AI boom and gaining the right to add a new type of technology to its products. The world’s largest publicly traded company has paid for the right to use Groq’s technology and is to integrate its chip design into future products. Some of the start-up’s executives are leaving to join Nvidia to help with that effort, the companies said. Groq would continue as an independent company with a new chief executive, it said on Wednesday in a post on its Web
CHINA RIVAL: The chips are positioned to compete with Nvidia’s Hopper and Blackwell products and would enable clusters connecting more than 100,000 chips Moore Threads Technology Co (摩爾線程) introduced a new generation of chips aimed at reducing artificial intelligence (AI) developers’ dependence on Nvidia Corp’s hardware, just weeks after pulling off one of the most successful Chinese initial public offerings (IPOs) in years. “These products will significantly enhance world-class computing speed and capabilities that all developers aspire to,” Moore Threads CEO Zhang Jianzhong (張建中), a former Nvidia executive, said on Saturday at a company event in Beijing. “We hope they can meet the needs of more developers in China so that you no longer need to wait for advanced foreign products.” Chinese chipmakers are in
RSS