The Organisation for Economic Co-operation and Development (OECD) has revised its global economic forecasts downward, citing escalating trade barriers, tighter financial conditions, and increasing policy uncertainty as significant factors contributing to the slowdown.
According to the OECD’s latest Economic Outlook, global GDP growth is projected to decelerate from 3.
3% in 2024 to 2.9% in both 2025 and 2026. This marks a notable shift from the previous period of resilient growth and declining inflation.
The report attributes this downturn to factors such as weakening trade and investment, diminished consumer and business confidence, and heightened policy uncertainty.
Particularly affected are major economies like the United States, Canada, Mexico, and China. In the U.S., growth is expected to fall sharply from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026. China’s economy is also projected to lose momentum, with growth slowing from 5.
0% in 2024 to 4.7% in 2025 and 4.3% in 2026. The euro area is forecasted to experience a modest recovery, with GDP growth rising from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026.
Inflationary pressures have re-emerged in some countries, especially those introducing higher trade tariffs. The OECD warns that further fragmentation of the global economy could exacerbate these challenges, urging governments to find ways to address their concerns within the global trading system to avoid a significant ratcheting-up of retaliatory trade barriers between countries.
In response to these developments, the OECD emphasizes the need for reforms to boost investment, competitiveness, and long-term debt sustainability to navigate the current economic landscape.
