OECD cuts global growth forecast - Trade war expected to slow world economy
The Organization for Economic Co-operation and Development (OECD) cut its global growth forecast on Tuesday, citing the impact of a trade war sparked by U.S. President Donald Trump's tariff policies. The Paris-based organization warned that these measures, especially the new tariffs, will significantly slow the global economy, with the United States expected to be among the hardest hit.
After a global growth rate of 3.3 percent in 2024, the OECD now predicts that the world economy will grow by just 2.9 percent in both 2025 and 2026. This is a lower figure than previous forecasts in March, which showed growth of 3.1 percent in 2025 and 3.0 percent in 2026.
Since this previous prediction, President Trump has launched a series of tariffs that have roiled financial markets.
"The global outlook is becoming increasingly challenging," the OECD said, noting that the "significant increase" in trade barriers, tighter financial conditions, reduced business and consumer confidence, and greater policy uncertainty could have "marked negative effects on growth" if they persist.
The organization revised its growth forecast for the U.S. from 2.2 percent to 1.6 percent in 2025, with a further slowdown expected in 2026 to 1.5 percent. This comes despite Trump's upbeat messaging, including a post on his Truth Social platform ahead of the report, which read: "Because of the tariffs, our economy is booming!"
The OECD ministerial meeting is being held in Paris on Tuesday and Wednesday, where US and EU trade officials are also expected to meet. The meeting comes after Trump threatened 50 percent tariffs on EU goods. Separately, the G7 countries will also meet to discuss trade issues.
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