No-deal Brexit could spark recession: OECD

No-deal Brexit could spark recession: OECD

No-deal Brexit could spark recession: OECD

The OECD's quarterly update on the global economy showed that it expects GDP growth to average out at around 3.3% in 2019, down from 3.5% at its last update in November previous year.

European exporters like Germany rode a wave of demand from China and the United States for their goods and have grown strongly, but countries like Italy have economies that are smaller than they were 10 years ago.

The situation is particularly acute in Europe, where the OECD cut its growth outlook for this year to 1% from 1.8%. As the main reason for the weakness of the slower-growing world economy, the European Export champion Germany is particularly dependent. G20 growth forecast was lowered by -0.2% to 3.5% in 2019, and kept unchanged at 3.7% in 2020.

But Argentina needs to carry out reforms that improve the outlook of its fiscal and financial sustainability in the medium term, the report added.

Those forecasts represented cuts of 0.2 percentage points for 2019 and 0.1 percentage points for 2020, compared to the OECD's last set of forecasts in November. "Uncertainty linked to Brexit has obviously had an impact on investment. A disorderly exit would raise the costs for European economies substantially", the OECD said.

On Wednesday, chief European Union negotiator Michel Barnier said "no solution" had been found to break the deadlock.

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OECD Interim Economic Outlook Projections, Year/Year, % 'The global economy is facing increasingly serious headwinds, said OECD Chief Economist Laurence Boone.

An EU official said it was unlikely there would be a deal before the weekend, which would mean talks could run close to March 12, a date by which May has promised parliament it will have another vote on her Brexit blueprint.

The Organisation for Economic Co-operation and Development, which groups the world's top developed economies, also warned of potential risks including China's slowdown sharpening and knock-on effects in the event of a no-deal Brexit.

The OECD also highlighted the impact of policy uncertainty, namely in relation to Brexit.

In more unsettling Brexit news, it has been reported that in a No-deal Brexit scenario the United Kingdom economy would tank.

World growth forecast is lowed from 3.5% to 3.4% in 2020. Governments should intensify multilateral dialogue to limit risks and coordinate policy actions to avoid a further downturn, she said.

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