The OECD raised its 2025 global growth forecast to 3.2%, up from 2.9%, citing stronger resilience than expected. In June, the forecast was cut due to concerns over Trump’s tariffs, which were initially expected to stifle growth. However, front-loading of imports, AI-related investments in the United States, and government spending in China supported global activity.
Despite the upgrade, growth slowed slightly compared to 3.3% in 2024, showing persistent challenges. The OECD warned that the full impact of tariffs is not yet fully visible, as many changes are phased in gradually. Tariffs are increasingly reflected in spending, labor markets, and consumer prices, affecting business and household choices.
Significant risk remains
Looking ahead, global growth is projected to slow to 2.9% in 2026 as front-loading ends and tariffs weigh on investment. Trump imposed a 10% baseline tariff on global imports in April, later raising duties for dozens of countries.
The United States struck deals with partners like Britain, Japan, and the European Union, though negotiations with China remain unresolved. By August, the effective US tariff rate reached 19.5%, the highest since 1933, the OECD estimated. Significant risks remain, including higher tariffs, inflation pressures, energy costs, and elevated public debt levels.
The OECD also warned of risks to financial markets if uncertainty persists. On the positive side, easing trade restrictions or rapid AI adoption could improve growth prospects.
Growth due to slow
The OECD upgraded the US outlook to 1.8% in 2025, but growth may slow due to tariffs and policy uncertainty. Lower net immigration and federal workforce cuts are also expected to weigh on US performance.
China’s outlook improved to 4.9%, while the eurozone and Japan were revised to 1.2% and 1.1%, respectively. Yet industrial production weakened in countries like Brazil, Germany, and South Korea, while consumption moderated in major economies. Overall, resilience has supported short-term growth, but risks suggest a slowdown is likely in the coming years.
Reference
Afp. (2025, September 23). OECD ups world economic outlook as tariffs contained, for now. https://www.bangkokpost.com. https://www.bangkokpost.com/business/general/3109508/oecd-ups-world-economic-outlook-as-tariffs-contained-for-now