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The global economy will slow from 3.3% last year to 2.9% in 2025 and 2026, the Organisation for Economic Cooperation and Development (OECD) says, trimming its estimates for growth shared in March (3.1% this year and 3.0% next year).
However, the growth outlook would likely be even weaker if protectionism increases. Additional increases in trade barriers or prolonged policy uncertainty would make things even worse.
The OECD forecasts the U.S. economy would grow only 1.6% this year and 1.5% next year, assuming that tariffs in place mid-May would remain unchanged through the rest of 2025 and 2026.
It estimates the world’s second-biggest economy – China – would grow 4.7% this year and 4.3% in 2026, little changed from previous forecasts (4.8% in 2025 and 4.4% in 2026). In China, the fallout from the U.S. tariff hikes would be partly offset by government subsidies for a trade-in programme on consumer goods and increased welfare transfers.
The outlook for the euro area is unchanged from March with growth forecast this year at 1.0% and 1.2% next year.
Source: reuters.com