The Organisation for Economic Co-operation and Development (OECD) has downgraded its global growth projections, citing rising trade disputes and ongoing inflationary pressures as key factors. The OECD now predicts that global GDP growth will slow from 3.2% in 2024 to 3.1% in 2025, with a further decline to 3.0% in 2026.
Impact of Trade Policies on Global Growth
The OECD’s latest analysis points to increasing trade restrictions—especially those linked to U.S. President Donald Trump’s tariff policies—as a major drag on economic activity worldwide. These protectionist measures are discouraging investment and consumer spending, thereby dampening economic growth across multiple regions.
Regional Economic Outlook
- United States: The U.S. economy is expected to lose momentum, with GDP growth projected to drop from 2.8% in 2024 to 2.2% in 2025, and further down to 1.6% in 2026.
- Eurozone: Growth in the euro area is also slowing, with GDP forecasts set at 1.0% for 2025 and 1.2% for 2026, reflecting weaker economic activity.
- China: Despite global economic challenges, China is expected to sustain relatively strong growth, with GDP estimated at 4.8% in 2025 and 4.4% in 2026.
Inflationary Pressures
The OECD warns that intensifying trade disputes are further fueling inflation worldwide. In the United States, core inflation is now anticipated to stay above the Federal Reserve’s target, potentially rising to 2.8% by the end of 2025.
Policy Recommendations
To address these economic risks, the OECD stresses the importance of sound monetary and fiscal policies aimed at strengthening resilience. The organization urges global cooperation to counter the impact of rising protectionism and support long-term economic stability.
Key Points
The OECD’s revised growth projections highlight the fragile nature of the global economic recovery, with trade tensions and inflation posing significant risks. Persistent geopolitical uncertainties, supply chain disruptions, and fluctuating commodity prices further exacerbate economic vulnerabilities. Policymakers must take strategic measures to sustain economic growth and maintain stability in the face of these challenges, ensuring a balanced approach to monetary and fiscal policies. Strengthening global cooperation, fostering investment in innovation and infrastructure, and enhancing workforce resilience will be key to navigating these economic headwinds and securing long-term prosperity.
