Latest news with #AlvaroPereira
Free Malaysia Today
2 days ago
- Business
- Free Malaysia Today
OECD urges M'sia to boost competitiveness amid global uncertainty
OECD said Malaysia could attract more investment by easing restrictions on FDI and promoting fair competition between state-owned enterprises, GLCs and private firms. (Envato Elements pic) KUALA LUMPUR : The Organisation for Economic Cooperation and Development (OECD) has called on Malaysia to take further steps to improve its economic competitiveness and resilience in light of global uncertainties. Speaking at a virtual conference on the OECD Economic Outlook today, its Southeast Asia division head, Jens Arnold, said Malaysia should pursue additional reforms to strengthen its economy. Recent reports suggest the US is proposing a 'revenge tax' targeting what it sees as unfair tax practices. The measure would affect passive income from US investments and profits of foreign-owned entities, including governments, companies and foundations. Arnold said Malaysia could attract more investment by easing remaining restrictions on foreign direct investment (FDI) and promoting fair competition between state-owned enterprises, GLCs and private firms. 'Malaysia has some room for monetary support, as inflation remains low and well contained. But, more importantly, structural reforms are needed to strengthen competitiveness,' he said. He stressed the need to address labour market challenges, such as skills mismatches, through better education and workforce training. 'These steps are crucial to making the economy more resilient to future shocks,' he said. OECD chief economist Alvaro Pereira projected Malaysia's economy to grow by 3.8% in 2025, down from stronger export performance in 2024, as global trade slows. He said inflation, which stood at 1.8% in 2024, was expected to rise to 2.2% in 2025 and 2.7% in 2026. 'Malaysia's labour market is strong, with unemployment at a 10-year low and rising labour force participation. This should continue to support private consumption,' he said. He noted that monetary policy remained broadly neutral and appropriate, but there was room to ease if growth slowed. However, he warned that authorities must watch for potential inflationary pressures from a tight labour market and rising wages. Southeast Asian outlook remains uncertain Arnold said that in 2024, Indonesia, Malaysia, the Philippines, Thailand and Vietnam grew at a weighted average of 5%, comparable to or higher than growth in the OECD area and China. However, he warned that trade and investment could weaken this year because of tariffs and rising policy uncertainty, with early signs of slowing activity seen in purchasing manager indices. He said boosting competition could improve productivity, especially by reducing regulatory barriers for new and foreign businesses. 'These five Southeast Asian economies remain more restrictive than many others. Lowering barriers to FDI and services would help improve the competitiveness of local industries,' he said.
UPI
3 days ago
- Business
- UPI
OECD slashes U.S., global growth outlook for 2025; blames tariffs
June 3 (UPI) -- The Organization for Economic Cooperation and Development on Tuesday downgraded its 2025 growth forecasts for the U.S. economy and globally, slashing its estimates to 1.6% and 2.9 % -- assuming current trade tariffs remain unchanged. In its biannual report on the health of the global economy, the OECD blamed the downward revision on what it said was an "increasingly challenging" environment with the slowdown concentrated in the tariff-impacted economies of North America and China. Immediately prior to the imposition of tariffs by U.S. President Donald Trump on all of America's trading partners on April 2, the OECD was still projecting 2025 growth of 2.2%. Now it thinks U.S. inflation could rise to close to 4% near the end of this year, while growth will decelerate again in 2026 to 1.5%. The OECD sees drastic slowdowns in Canada and Mexico, the United States' two largest trading partners, with GDP growth in Mexico falling by more than two-thirds to 0.4% in 2025, while Canada's economy will grow by just 1%. Chinese GDP growth will slow to 4.7% this year and still further to 4.3% in 2026, while the European Union economy will pick up slightly, but only to a relatively anemic growth rate of 1%. "The reasons why we downgraded almost everybody in our forecast is that trade uncertainty and economic policy uncertainty has reached unprecedented levels," OECD Chief Economist Alvaro Pereira told CNBC. The report said a major jump in the level of trade barriers, tighter financial conditions, weakened business and consumer confidence and heightened policy uncertainty all posed significant threats to growth. "If these trends continue, they could substantially dampen economic prospects. Rising trade costs -- particularly in countries implementing new tariffs -- are likely to fuel inflation, although this may be partly offset by softer commodity prices," the OECD said. The report also warned of risks from trade wars or unpredictable policy, a chilling effect on consumer and corporate spending, ongoing "repricing of risk in financial markets," and worries inflation may stay higher for longer amid expectations of price hikes, particularly in countries facing higher trade costs or labor shortages. However, the OECD said lifting trade barriers sooner rather than later could dramatically alter the gloomy prognosis, stimulating economic growth and holding inflation in check as would peaceful endings to wars in Ukraine and the Middle East. In its last set of projections in December, the OECD forecast GDP in the United States would slow in 2025 but only to 2.4%, down from 2.8% in 2024, while it predicted the global economy would expand by 3.3%, up from 3.2% in 2024. "The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path. Our latest economic outlook shows that today's policy uncertainty is weakening trade and investment, diminishing consumer and business confidence," said OECD Secretary-General Mathias Cormann. He urged governments to resolve their international trade differences via constructive dialogue and refrain from actions that negatively impact the competition, innovation, and productivity benefits of the rules-based system of global trade.
Daily Mail
3 days ago
- Business
- Daily Mail
BREAKING NEWS The US is heading for a sharp economic downturn, influential global organization warns
Donald Trump's aggressive trade policies has sent the global economy into a downturn, the OECD warned in a major report on Tuesday. The US economy will be among the hardest hit with growth slowing to 1.6 percent this year down from 2.8 percent in 2024, according to the group's new forecasts. The Paris-based organization also predicted that Trump's tariffs will hit the global economy harder than expected, slashing its growth forecast for the year down to 2.9 percent compared to 3.3 percent last year. The group, made up of the 38 wealthy nations, said that protectionism is also driving up inflation. 'Weakened economic prospects will be felt around the world, with almost no exception,' OECD chief economist Alvaro Pereira said in the report. 'Lower growth and less trade will hit incomes and slow job growth.' The situation could also deteriorate further if countries begin to retaliate against the US with their own steep tariffs, the group warned. Uncertainty from the rapidly changing policies is also hitting consumer confidence and holding back investment, according to the report. The OECD has called on governments to ease trade tensions and work to eliminate uncertainty. 'Agreements to ease trade tensions and lower tariffs and other trade barriers will be instrumental to revive growth and investment and avoid rising prices,' the OECD said. 'This is by far the most important policy priority.' The report comes as its members, including US trade representative Jamieson Greer, prepare to meet in Paris for their annual meeting. The OECD also criticized other key Trump policies including his vast reductions in the federal workforce and curbs on immigration, both of which are also dragging on the economy. The report also warned that the US budget deficit will expand further as weaker economic activity will override the gains made by spending cuts and revenue from tariffs.
BBC News
3 days ago
- Business
- BBC News
Donald Trump's tariffs will hurt global growth, OECD warns
Global economic growth is set to be slower this year largely because of Donald Trump's US tariffs, according to a leading international policy growth is now expected to slow to 2.9%, down from a previous forecast of 3.1%, said the Organization for Economic Co-operation and Development (OECD).It blamed a "significant" rise in trade barriers for the downgrade and warned that "weakened economic prospects will be felt around the world, with almost no exception".Since the US president returned to the White House, a long list of countries have been targeted by tariffs, but Trump's unpredictable approach to implementing the measures has created widespread uncertainty. "We are forecasting basically a downgrade for almost everybody," Alvaro Pereira, the OECD's chief economist told the BBC. "We'll have a lot less growth and job creation than we had forecasted in the past."The OECD also lowered its outlook for US economic growth this year, from 2.2% to 1.6%, before slowing again in warned that the US was at risk from rising inflation, something that Trump repeatedly promised would fall during his presidential campaign.
Irish Times
3 days ago
- Business
- Irish Times
Trump's tariffs plunge global economy into slowdown
Donald Trump's trade policies have tipped the world economy into a downturn clouded in heightened uncertainty, with the US among the hardest hit, the OECD said. The Paris-based organisation slashed its global forecasts for the second time this year, citing the impact of the American president's tariff onslaught. The combination of trade barriers and uncertainty are hitting confidence and holding back investment, it said, while also warning that protectionism is adding to inflationary pressures. The OECD now forecasts global economic growth to slow to 2.9 per cent this year from 3.3 per cent in 2024. It expects the rate of expansion in the US will tumble further, to 1.6 per cent from 2.8 per cent – an outlook that is significantly lower than its projection in March. 'Weakened economic prospects will be felt around the world, with almost no exception,' Chief Economist Alvaro Pereira said. 'Lower growth and less trade will hit incomes and slow job growth.' READ MORE The assessment indicates how Trump's policies have become the most pressing problem for the global economy, with no easy solution in sight. The situation could yet be exacerbated by retaliation from US trading partners, a further erosion of confidence, or another bout of repricing on financial markets, the OECD said. The club of 38 rich countries published its forecasts just as its members' ministers convene in Paris for an annual meeting. Top commerce officials are expected there include US trade representative Jamieson Greer and EU trade commissioner Maroš Šefčovič. Lin Feng, a representative from China's Ministry of Commerce, is also scheduled to attend. 'Agreements to ease trade tensions and lower tariffs and other trade barriers will be instrumental to revive growth and investment and avoid rising prices,' the OECD said. 'This is by far the most important policy priority.' Yet the organisation also said that even if Trump reversed course on tariffs, the bonus in terms of growth and reduced inflation would not materialise immediately, due to a persistent drag from heightened uncertainty over policy. For the US, the OECD said curbs on immigration and a sizeable reduction in the federal workforce add to the trade-related drag on the economy. It also cautioned that the budget deficit will expand further as the effect of weaker economic activity will more than offset spending cuts and revenues from tariffs. Inflation in the US will also move higher this year, making it likely that the Federal Reserve will not resume easing policy until 2026, according to the OECD. That process may even be derailed if consumer-price expectations get de-anchored, it added. For other central banks, the OECD also urged continued vigilance. While it expects inflation to ease to their targets in 2026, that process will now take longer, and the pace of price increases may even increase before easing again, it said. Besides the fallout from global trade, the organisation also warned that fiscal risks are intensifying around the world, with 'tremendous' pressures for more spending on defence, climate and ageing populations. It called for governments to reduce non-essential spending and raise revenues by broadening tax bases. – Bloomberg
