What's happened
The OECD has downgraded its global growth forecasts for 2025 and 2026, citing heightened trade tensions and economic uncertainty. The US, Canada, Mexico, and China are expected to experience the most significant slowdowns, with the global economy projected to grow by only 2.9% in both years. The UK’s growth forecast has also been reduced.
What's behind the headline?
Key Insights
- Global Slowdown: The OECD's forecast indicates a shift from resilient growth to a more uncertain economic landscape, primarily driven by trade tensions.
- Impact of Tariffs: US tariffs, particularly on imports from China, are expected to disrupt supply chains and dampen investment, leading to lower growth rates in affected countries.
- Regional Disparities: While the OECD predicts a slowdown in the US, Canada, Mexico, and China, India is expected to be a standout performer among G20 nations, with growth exceeding 6%.
- Inflation Concerns: The report highlights persistent inflationary pressures, particularly in the US, where import prices are rising due to tariffs, potentially affecting consumer spending.
- Future Outlook: The OECD urges governments to de-escalate trade tensions and maintain open markets to foster economic recovery and growth.
What the papers say
According to the South China Morning Post, the OECD's report emphasizes that the global economic slowdown will be most pronounced in the US, Canada, Mexico, and China, with the US economy projected to grow by only 1.6% this year. The Independent notes that the UK’s growth forecast has been cut from 1.4% to 1.3% due to heightened trade tensions and uncertainty. Business Insider UK highlights that the OECD's predictions reflect the fallout from the US administration's trade policies, which have raised the effective US import rate to its highest since 1938. The Guardian adds that the uncertainty created by the tariff war is negatively impacting business and consumer confidence, with the OECD's chief economist warning of the broader implications for global trade and investment.
How we got here
The OECD's latest report reflects the impact of US tariffs on global trade, which have created significant uncertainty and reduced business confidence. The organization has adjusted its growth predictions downward due to these factors, affecting major economies worldwide.
Go deeper
- What are the implications of the OECD's forecast?
- How will tariffs affect global trade?
- What can governments do to mitigate economic slowdown?
Common question
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How Are Trump's Tariffs Impacting the US Economy?
Trump's tariffs have stirred significant debate regarding their effects on the US economy. As trade tensions escalate, many are left wondering how these policies influence growth, jobs, and global trade dynamics. Below, we explore key questions surrounding the economic consequences of these tariffs.
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Why Did the OECD Cut Global Growth Forecasts for 2025?
The OECD has recently downgraded its global growth forecasts, raising concerns about the economic landscape for the coming years. This decision stems from various factors, including trade tensions and uncertainty in major economies. Below, we explore the implications of these changes and what they mean for consumers, businesses, and specific sectors.
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