OECD revises down 2025 global growth outlook to 2.9%

CGTN Europe

CGTN Europe discussed this with International Economist Vicky Pryce

Transcript

00:00International economist Vicky Price shared her thoughts on what's affecting global growth prospects the most.

00:07Well, the main one the OECD is talking about is trade barriers,

00:11which, of course, if you look back at their earlier forecast,

00:13they didn't expect them to be anything like as high as they're likely to stay at.

00:19So that has been a major sort of pull, if you like,

00:23in terms of slowing down the rate of growth that they expect for this year.

00:27Now, of course, the question is how long they last.

00:29They've also pulled down a little bit the growth for next year for the OECD countries,

00:34and they have downgraded quite significantly the U.S., but also other countries, too.

00:39But it's not the only one.

00:42I mean, yes, of course, there are also indirect issues,

00:45such as business confidence has fallen and consumer confidence as well because of those tariffs.

00:50But what it also means is that because inflation is likely to be slightly higher

00:54than would otherwise have been the case, particularly for those countries imposing tariffs,

00:59or even any counter tariffs that there may be, they think that interest rates are going to stay higher,

01:03which means that conditions on the financial side will also be tighter, both for households and businesses.

01:08So all that is bringing the forecast down from where it would have been otherwise.

01:12It's interesting you talk about inflation because the Eurozone has just come up with their figures,

01:19and they are actually now below their target.

01:22So is that going to be good news for consumers?

01:26Well, you're absolutely right that this is a factor we need to be looking at because the trade theory will tell you,

01:33and if one can use sort of a bit of economics here, that the countries that are imposing tariffs are the ones with higher inflation outlook.

01:41Those that do not but are suffering from the tariff increases in terms of their exports are going to have lower growth

01:48and therefore lower inflation.

01:50And I think that's what we're seeing right now.

01:52So it's not going to be uniform what's going to happen on the inflation front,

01:55but certainly countries that may be affected by high tariffs are already seeing some reduction in demand

02:02and also commodity prices are coming down, such as oil prices, for example.

02:07So what it has meant really for Europe is that it has really not been growing very fast at all.

02:12It's not at all surprising because confidence is quite low that inflation is also, in fact, declining.

02:18And it is below target.

02:20And we're going to have a meeting of the European Central Bank this week on Thursday,

02:26and they're likely to cut rates even further.

02:29So they already are well below where the UK is and where the US is,

02:34and they're likely to be cut even further by possibly a quarter of a point on June 6th.

02:40We've just seen in those previous reports two different US predictions, 1.6 versus 1.2 growth rate.

02:48Realistically, how much can we actually rely on these figures in an uncertain world of such rapid change?

02:56With difficulty, really, because anything could happen.

02:59So, for example, if there is an agreement now or at least some of the tariff increases

03:04which President Trump wants to impose do not happen because of legal issues,

03:09courts ruling that he can't impose them,

03:11what we might see is lower inflation, possibly lower interest rates,

03:15and possibly, therefore, faster growth in the US economy.

03:17So right now there is such big uncertainty, and this is really what the OECD has been talking about,

03:23that making any predictions is difficult.

03:25But they also say that if tariffs are lower than they are dissipating,

03:30then there will be faster growth.

03:33So we look at the two predictions and think of what this might mean in terms of the underlying assumptions,

03:39that the assumptions have to be based very much on tariffs.

03:42So, we expect it to be based on theHay tells.

03:55So thank you for theity.

03:56So thank you for the issue of the草 and the thought that this would be a law of the law of the law of the law.

03:59So thank you.

04:00So thank you for the Due to the law of the law.

04:03So thank you for the reasons why this is the result of the law of the law of the law.

04:05So thank you for the law of the law.

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