The global economy is expected to slow over the next two years, as persistent trade tensions and policy uncertainty continue to dampen economic activity, according to the OECD’s latest Interim Economic Outlook released Tuesday.
Worldwide growth is forecast to ease from 3.3% in 2024 to 3.2% in 2025, and further down to 2.9% in 2026, despite stronger-than-anticipated resilience in the first half of 2025. The report notes that early stockpiling of goods ahead of higher tariffs is being unwound, while tariff enforcement and ongoing uncertainty are negatively affecting both investment and trade flows.
In the U.S., GDP growth is projected to slow to 1.8% in 2025 and 1.5% in 2026. The eurozone is expected to see 1.2% growth in 2025 and 1.0% in 2026, while China’s expansion is forecast to moderate to 4.9% in 2025 and 4.4% in 2026.
Inflation is anticipated to ease across most G20 economies as economic growth softens and labor market pressures subside. Headline inflation is projected to fall from 3.4% in 2025 to 2.9% in 2026, while core inflation in advanced G20 nations is expected to remain relatively steady at 2.6% in 2025 and 2.5% in 2026.
OECD Secretary-General Mathias Cormann underlined that while the global economy has demonstrated resilience, “the full effects of higher tariffs and policy uncertainty have yet to be felt.”
He urged governments to “engage productively with one another to make international trading arrangements fairer and function better” to safeguard the economic benefits of open markets and rules-based global trade.
The OECD also recommends that central banks stay vigilant and act promptly to changes in price stability risks. It suggests that monetary policy rate cuts should continue in economies where inflation is expected to moderate toward central bank targets, as long as inflation expectations remain firmly anchored.
The report highlights the importance of fiscal discipline to manage growing budget pressures and high public debt, advocating for credible medium-term adjustment strategies with strengthened efforts to control and reallocate spending and optimize revenues to stabilize debt levels.
OECD Chief Economist Álvaro Santos Pereira emphasized that “stronger structural reform efforts will be key to durably improve living standards and realize the potential gains from new technologies such as artificial intelligence.”
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