The OECD has published its latest Economic Outlook, warning that higher barriers to trade, tighter financial conditions, weakening confidence and elevated policy uncertainty are expected to weigh on global activity. It projects global growth slowing from 3.3% in 2024 to 2.9% in both 2025 and 2026, with the largest downgrades concentrated in the United States, Canada, Mexico and China. The Outlook forecasts United States GDP growth falling from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026, while the euro area is expected to strengthen modestly from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026. China’s growth is projected to ease from 5.0% in 2024 to 4.7% in 2025 and 4.3% in 2026. Inflation pressures are described as resurfacing in some economies, with higher trade costs in countries raising tariffs expected to push inflation up, partly offset by weaker commodity prices, and G20 headline inflation projected to moderate from 6.2% to 3.6% in 2025 and 3.2% in 2026. The OECD highlights downside risks from further trade fragmentation and retaliatory actions that could disrupt supply chains, as well as the possibility of more persistent inflation prompting more restrictive monetary policy, and rising debt service burdens tightening fiscal space, while suggesting central banks remain vigilant and that policy rate reductions can continue where inflation is projected to moderate and demand is subdued if inflation expectations stay anchored and trade tensions do not intensify.
OECD 2025-06-03
OECD Economic Outlook projects global growth slowing to 2.9% in 2025 and 2026 as trade policy uncertainty rises
The OECD's Economic Outlook warns of slowing global growth, projecting a decline from 3.3% in 2024 to 2.9% in 2025 and 2026, with significant downgrades in the US, Canada, Mexico, and China. Inflation pressures may resurface due to higher trade costs, though weaker commodity prices might partly offset this. The OECD advises central banks to remain vigilant, suggesting policy rate reductions where inflation moderates and demand is subdued, provided inflation expectations remain anchored and trade tensions do not escalate.