The Organization for Economic Cooperation and Development (OECD) has issued a warning about a slowdown in the global economic growth. According to the organization’s economic outlook, which was published on Tuesday, the global growth is expected to slow down from 3.3% in 2024 to 2.9% in 2025 and 2026. The decline is likely to be most pronounced in the United States, Canada, Mexico and China, while other economies are expected to experience smaller downward corrections.
The OECD projects a decline in the US GDP growth from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026. In the Euro area, the growth is expected to strengthen slightly, from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026. China’s growth is expected to slow down from 5.0% in 2024 to 4.7% in 2025 and 4.3% in 2026. Germany, on the other hand, is expected to experience a growth rebound, from a decline of 0.2% in 2024 to a positive 0.4% in 2025 and 1.2% in 2026.
The OECD also notes that inflationary pressures have increased in some economies and higher trade costs in countries that have introduced tariffs could further fuel inflation, although this effect may be partially offset by weaker commodity prices. The organization expects the annual inflation rate in the G20 countries to decline from 6.2% in 2024 to 3.6% in 2025 and 3.2% in 2026.
OECD Secretary-General Mathias Cormann stated that the world economy has shifted from a phase of robust growth and falling inflation to a more uncertain course. “Our current economic outlook shows that the current political uncertainty is weakening trade and investment, eroding consumer and business confidence and dampening growth prospects” he said. The governments must engage in dialogue to address all the problems in the global trade system in a positive and constructive manner.