Economic Organisations Downgrade Growth Forecasts: A Global Impact
The global economy is facing headwinds as several economic organisations have recently downgraded their growth forecasts for major economies, including the UK, US, Canada, and Mexico. These downward revisions are primarily attributed to the ongoing trade tensions, particularly the implementation of tariffs.
UK:
The Organisation for Economic Co-operation and Development (OECD) has reduced its growth forecast for the UK from 1.2% to 1% for 2019. The International Monetary Fund (IMF) has also lowered its growth projection for the UK to 1.2% from the earlier estimate of 1.4%. The trade tensions between the UK and the European Union, as well as the US, are the primary reasons for these downward revisions.
US:
The IMF has downgraded its growth forecast for the US from 2.3% to 2.0% for 2019. The trade tensions, particularly those with China, are the main reason for this revision. The ongoing tariff war between the US and China has led to increased uncertainty and decreased business confidence, which is negatively impacting the US economy.
Canada and Mexico:
The OECD has downgraded its growth forecast for Canada from 1.6% to 1.3% for 2019. The IMF has also lowered its growth projection for Canada to 1.6% from the earlier estimate of 1.8%. The US-Mexico-Canada Agreement (USMCA) trade deal, while replacing the NAFTA agreement, has not been able to fully allay the concerns of investors and businesses due to the ongoing tensions between the US and Mexico.
Impact on Individuals:
The downward revisions in growth forecasts could lead to several negative consequences for individuals. These include:
- Decreased job opportunities: As businesses face increased uncertainty and decreased confidence, they may hesitate to hire new workers or expand their workforce.
- Reduced wages: With decreased economic activity, wages may not grow as fast as they would in a strong economy.
- Higher prices: Tariffs can lead to higher prices for consumers as companies pass on the additional costs to consumers.
Impact on the World:
The downward revisions in growth forecasts are not just limited to these countries. The trade tensions are global in nature and can impact economies around the world in several ways:
- Decreased global trade: The ongoing trade tensions can lead to decreased global trade, which can negatively impact countries that are heavily reliant on exports.
- Increased financial instability: The trade tensions can lead to increased financial instability as investors become more risk-averse and move their money out of affected markets.
- Decreased business confidence: The trade tensions can lead to decreased business confidence, which can negatively impact investment and economic growth.
Conclusion:
The downward revisions in growth forecasts by economic organisations for major economies, including the UK, US, Canada, and Mexico, are a cause for concern. These revisions are primarily attributed to the ongoing trade tensions, particularly the implementation of tariffs. The negative consequences of these downward revisions can be felt by individuals in the form of decreased job opportunities, reduced wages, and higher prices. The world economy as a whole can also be impacted through decreased global trade, increased financial instability, and decreased business confidence. It is imperative that governments and businesses work towards finding a resolution to these trade tensions to mitigate the negative consequences for the global economy.
Sources:
OECD. (2019). Economic Outlook Interim Report: January 2019. Retrieved from
IMF. (2019). World Economic Outlook: January 2019. Retrieved from
