The leading economic organization cut its forecast for global growth due to trade tensions sparked by Donald Trump’s tariffs. It warned that conditions could worsen.
Global growth is expected to slow due to “trade barriers” and “increased geopolitical and policy uncertainty,” the Organisation for Economic Co-operation and Development (OECD) said Monday.
Growth is projected to slow to 3.1% in 2025 and 3.0% in 2026, with the Paris-based policy forum lowering its projections from 3.3% for both this year and next.
“Increasing trade restrictions will contribute to higher costs for both production and consumption. It remains essential to ensure a well-functioning, rules-based international trading system and to keep markets open,” OECD Secretary-General Mathias Cormann said.
US, eurozone driving weaker growth expectations
The projections were based primarily on weaker expected growth in the United States and the eurozone.
The OECD said US growth would slow to 2.2% this year, before falling to 1.6% in 2026. The eurozone is expected to grow just 1% this year, reaching 1.2% in 2026.
China’s growth is forecast to drop from 4.8% this year to 4.4% in 2026.
Germany’s economic growth for this year is now forecasted to be 0.4%, down from the 0.7% forecast made in December.
Risk of inflation
Inflation remains a problem, with G20 countries expected to see 3.8% inflation in 2025 and 3.2% in 2026.
“Core inflation is expected to stay above central bank targets in many countries, including the US, in 2026,” the OECD said.
The projections include US President Donald Trump’s new tariffs on trade between the US, Canada, and Mexico but exclude tariffs on trade between the US and China, steel and aluminum tariffs, and those involving the European Union.
The OECD said that “significant risks remain” as further tit-for-tat tariffs between major global economies “would hit growth around the world and add to inflation.”
Edited by: Alex Berry
DW News
