Trade tensions have cost the world close to 1 percentage point in terms of growth, according to Angel Gurria, secretary-general of the Organization for Economic Cooperation and Development.
“It’s gotten very bad,” Gurria said in an interview with Bloomberg Television’s Kathleen Hays in Fukuoka, Japan, on Friday, referring to the uncertainty created by trade tensions. “Uncertainty is the enemy of growth.”
The global growth outlook is worsening as the US-China trade war escalates and President Donald Trump threatens countries like Mexico with higher tariffs. The OECD last month cut its global growth forecast to 3.2% for 2019 from 3.9% seen previously.
Central banks across emerging markets have responded to concerns about growth with rate cuts, while the Federal Reserve and European Central Bank have signaled their readiness to turn more dovish. Still, they may be limited in their ability to prevent the slowdown.
“The question is how much armory do they still have, how many bullets, particularly silver bullets?” he said. “Fewer and fewer.”