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OECD chief economist Laurence Boone addresses a news conference to present the group's interim economic outlook in Paris on Sept. 20, 2018.ERIC PIERMONT/AFP/Getty Images

Global economic growth has peaked in the face of rising trade frictions and emerging-market turbulence, the OECD said on Thursday, as it trimmed its earlier outlook.

The world economy is on course for growth of 3.7 per cent this year and next, up from 3.6 per cent last year, according to the Organization for Economic Co-operation and Development (OECD).

In its previous economic outlook in May, the Paris-based policy forum had forecast growth of 3.8 per cent this year and 3.9 per cent in 2019, but it said in an update on Thursday that growth had peaked since those projections were made.

The OECD said trade growth, the engine behind the global economic upswing in recent years, had slowed this year to around 3 per cent from 5 per cent in 2017 as tensions between the United States and its major trade partners weighed on confidence and investment.

“Export order books have started to decline and that has been going on for a few months, and what that means is the deceleration in trade growth will continue,” OECD chief economist Laurence Boone told journalists.

“We are seeing the rise of protectionism biting into our outlook,” she added.

The OECD also trimmed its forecast for Canada’s economic growth next year.

The updated projection now sees Canada’s economy expanding by 2 per cent in 2019, rather than the 2.2 per cent it forecast earlier.

Even though the United States is the source of these trade frictions, that country’s economic outlook was nevertheless the brightest among the OECD’s major developed economies, thanks to tax cuts and government spending.

The OECD left its forecast for U.S. growth this year unchanged at 2.9 per cent, but trimmed the forecast for next year to 2.7 per cent, from 2.8 per cent previously.

It said that U.S. import tariffs were beginning to have an impact on the world’s biggest economy, estimating that those already imposed would lift overall U.S. prices by 0.3 per cent to 0.4 per cent.

Particular products were even more affected, with U.S. prices for washing machines jumping 20 per cent between March and July, while U.S. auto exports to China were down nearly 40 per cent over one year.

Meanwhile, the OECD said that a weaker currency had so far helped China – which is not an OECD member – absorb the impact of higher U.S. tariffs, leaving its growth forecasts unchanged at 6.7 per cent for this year and 6.4 per cent for next year.

Rising U.S. interest rates and a stronger U.S. dollar spelled trouble for emerging-market economies such as Argentina, Brazil and Turkey, the OECD said, slashing its forecasts for those three countries.

Ms. Boone said the OECD did not expect the difficulties to become a full-blown emerging-market crisis, as occurred in 1998, because countries managed their finances better now.

Meanwhile, softer foreign demand meant the euro zone economy was unlikely to fare as well as previously expected.

The OECD downgraded the euro zone’s growth forecast for this year to 2.0 per cent from 2.2 per cent, and nudged next year’s outlook down to 1.9 per cent from 2.1 per cent.

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