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5d ago

OECD Cuts Global Growth Forecast to 2.9% as Trump Tariffs Bite

Holding current tariff barriers risks further slowing growth by inflating costs; disrupting supplies; eroding confidence.

GDP growth is expect to hit reach a measly 1.9 per cent growth, the OECD has tipped in its latest economic outlook. Gaye Gerard/ NewsWire
Rachel Reeves, the chancellor, had previously been warned by the International Monetary Fund
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A double decker bus passes the skyline with its dominating banking district in Frankfurt, Germany, November 8, 2023. REUTERS/Kai Pfaffenbach/File Photo

Overview

  • Global expansion is now seen at 2.9% in both 2025 and 2026, down from forecasts of 3.1% and 3.0% in March.
  • The US outlook is downgraded to 1.6% growth in 2025 and 1.5% in 2026 as tariffs push the effective import rate to 15.4%.
  • US inflation is projected to approach 4% by the end of 2025, roughly double the Federal Reserve’s target, driven by higher trade costs.
  • UK growth is trimmed to 1.3% in 2025 and 1.0% in 2026 while China is forecast at 4.7% and 4.3%, reflecting spillovers from higher trade barriers.
  • The OECD calls for easing tariffs, broadening tax bases and cutting non-essential spending to restore investment and fiscal strength.