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BUSINESS GUARDIAN guardian.co.tt MARCH 9 • 2017
OECD warns any trade
pullback will hamper growth
Any rollback of international trade
deals would hurt global growth which
is already soft with only a modest
recovery on the cards this year, the
OECD said on Tuesday.
The Organisation for Economic
Co-operation and Development did
not mention US President Donald
Trump by name, but warned that
ripping up trade agreements hurts
everybody, especially those who put
up new obstacles to trade.
"An increase in trade barriers in
the major global trading economies...
would have a major adverse impact on
trade and GDP, particularly for those
economies that imposed new trade
barriers," the OECD said in an inter-
im version of its Economic Outlook.
The Paris-based OECD advises its 35
members, mostly developed countries,
on economic development.
"There is significant uncertainty
about the future direction of trade pol-
icy globally, in part because of falling
public support for trade in advanced
countries," the report.
"A rollback of existing trade open-
ness would be costly, with a signifi-
cant share of jobs in many countries
linked to participation in global value
chains," it said.
Only last week, the Trump adminis-
tration made clear it did not feel bound
by World Trade Organisation rulings,
saying it "will aggressively defend
American sovereignty over matters
of trade policy."
Trump has also repeatedly trashed
the North American Free Trade Agree-
ment and threatened to slap tariffs on
imports from Mexico.
Trump also complained that the US
gave up too much in the Trans-Pacific
Partnership, an Asia-Pacific region-
al deal he scrapped immediately after
Meanwhile, the OECD said it stood
by its 3.3 per cent estimate for global
gross domestic product growth this
year. It first gave the figure in No-
Most individual country forecasts
were unchanged from the earlier es-
timate, but Britain is headed for 1.6
percent growth this year, up from the
OECD's earlier 1.2 per cent projection.
But several obstacles could still get
in the way of the global recovery.
"Confidence has improved, but con-
sumption, investment, trade and pro-
ductivity are far from strong," it said.
"Disconnect between financial
markets and fundamentals, potential
market volatility, financial vulnerabil-
ities and policy uncertainties could,
however, derail the modest recovery."
One remedy would be for govern-
ments to use any leeway in public
finances to help struggling demand.
"Countries should use increased
fiscal space to implement effective fis-
cal initiatives that boost demand and
make government taxes and spending
more supportive of long-term growth
and equity," the OECD said.
European powerhouse Germany,
which is running a record-high budget
surplus, has recently come under in-
creasing pressure from its EU partners
to loosen its purse strings to push im-
ports and consumer spending. AP
The US trade deficit jumped in
January to the highest level
in nearly five years as a flood
of mobile phones and other
consumer products widened
America's trade gap with
China. The result underscores the challenges
facing President Donald Trump in fulfilling
a campaign pledge to reduce America's trade
The deficit in January rose 9.6 per cent to
US$48.5 billion, up from a December deficit of
US$44.3 billion, the Commerce Department
reported Tuesday. It was the largest monthly
gap since a deficit of US$50.2 billion in March
US exports edged up a slight 0.6 per cent to
US$192.1 billion, helped by stronger auto sales.
But that was swamped by a 2.3 per cent surge
in imports to US$240.6 billion, led by mobile
phones, oil and foreign-made cars.
During the campaign, Trump pledged to
attack America's persistent trade deficits,
which he blamed for the loss of millions of
good-paying factory jobs. He has threatened
to slap punitive tariffs on imports from Chi-
na, Mexico and other nations he has accused
of trading unfairly. But economists worry
that Trump's tough talk could spark all-out
trade wars in which foreign nations retaliate
by boosting their tariffs on American goods.
White House trade adviser Peter Navarro,
a long-time critic of China's trade practices,
told an economists' group on Monday that
reducing America's trade deficits would de-
liver stronger economic growth and improve
For January, the US deficit with China in-
creased 12.8 per cent to US$31.3 billion, the
highest level since September. The figure re-
flects a big rise in imports of mobile phones,
clothing, televisions, toys and games.
American exporters have struggled over
the past two years as a rising dollar has made
their goods more expensive and therefore less
competitive in overseas markets.
Economists believe if the dollar stabiliz-
es this year, export growth should rebound,
reflecting in part stronger economic growth
in many of America's major export markets.
Andrew Hunter, US economist for Capital
Economics, said that the big increase in the
deficit in January likely signals that trade will
drag overall growth in the first quarter. But he
said the impact wouldn't be as severe as in the
fourth quarter, when trade trimmed growth
by 1.7 percentage points.
And brighter days may be ahead.
"With the headwind from the dollar's prior
appreciation having eased and global growth
picking up quite sharply, the outlook for ex-
ports is better now than it has been in some
time," Hunter said.
The trade deficit is the difference between
imports and exports. A rising deficit is a drag
on overall economic growth because it means
more products are being produced for domestic
consumption from overseas.
The trade deficit is expected to trim over-
all economic growth by around one-half per-
centage point this year. Many economists are
looking for the US economy to grow between 2
per cent to 2.5 per cent in 2017, up from anemic
1.6 per cent growth in 2016.
US trade deficit
jumps to 5-year high
of US$48.5 billion
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