OECD raises outlook for Canadian growth to 2.2 per cent this year

OECD forecasts for growth in 2018 and 2019

The Organization for Economic Cooperation and Development (OECD) raised its growth outlook for the global economy on Tuesday but held its forecast for Korea at 3 percent.

Another upgrade to world economic growth forecasts, due to tax cuts in the United States, is likely to fire up the debate over the Turnbull government's efforts to cut the company tax rate.

An improved outlook for world economic growth will be placed at severe risk if a trade war results from USA metal tariffs, a respected global forum has warned.

The OECD also said that the world economy is set to grow at an annual rate of 3.9% over the next two years.

Mr Pereira told the Reuters news agency: "We think that the stronger economy is here to stay for the next couple years".

The US economy, by contrast, is seen expanding by 2.9 per cent this year and 2.8 per cent next, helped by the simulative effect of tax cuts.

It said rebounding business investment was the core reason for the expected acceleration in global growth - with trade rising 5% this year.

"Global GDP growth is estimated to have been 3.7 percent in 2017, the strongest outcome since 2011, with positive growth surprises in the euro area, China, Turkey and Brazil", the OECD said in a press release. The estimate for next year was raised from 2.1 percent to 2.8 percent.

Financial markets have been hit by fears of a trade war following U.S. President Donald Trump's move to slap tariffs on steel and aluminum imports.

"This could obviously threaten the recovery".

Among other hot economies, stronger growth in France and Germany boosted the outlook for the broader euro zone to 2.3 per cent for this year and 2.1 per cent in 2019. "Certainly we believe this is a significant risk, so we hope that it doesn't materialize because it would be fairly damaging", Pereira said.

The OECD also revised up its forecasts for Germany and France, but remained gloomy about the prospects for Britain as it approaches the date for Brexit in March 2019. With Britain due to leave the European Union next year, its economic growth was seen easing to 1.1 per cent in 2019, unchanged from the OECD's November estimate. That's up from a November forecast of 1.2 per cent but it would still see the United Kingdom lagging all other G20 countries.

This resulted in respective percentage point upgrades of 0.2 and 0.3 for this year and next from the OECD's previous forecasts.

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