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OECD Cuts Global Growth Forecasts as Trade Tensions Escalate

The OECD cites U.S. tariffs and geopolitical uncertainty for reduced growth projections, inflation concerns, and economic risks across major economies.

A worker works at steel company in Monterrey, Nuevo Leon, Mexico.
People cross the intersection of SW 8th Steet and Brickell Ave. at the Brickell neighborhood, known as the financial district, in Miami, Florida, U.S., February 23, 2023. REUTERS/Marco Bello/File Photo
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Shoppers cross the street on Regent St in London, Britain, December 26, 2024. REUTERS/Jaimi Joy/File Photo

Overview

  • The OECD reduced its global growth forecast for 2025 from 3.3% to 3.1%, with a further slowdown to 3.0% projected for 2026.
  • U.S. economic growth is now expected to decline to 2.2% in 2025 and 1.6% in 2026 due to tariffs and trade uncertainty under President Donald Trump.
  • Canada and Mexico face significant economic impacts, with Canada’s growth forecast slashed to 0.7% and Mexico projected to enter a recession in 2025 and 2026.
  • The UK’s growth outlook has been downgraded to 1.4% in 2025 and 1.2% in 2026, with inflation predicted to remain above central bank targets.
  • The OECD warns that rising trade barriers and retaliatory tariffs risk higher inflation, restrained investment, and long-term economic fragmentation.