The Organisation for Economic Cooperation and Development (OECD) has cut its global economic growth forecast to 2.9% for both 2025 and 2026. This downgrade reflects the growing impact of the trade war initiated by the Trump administration, which has weakened the outlook for the U.S. economy and the world at large.
The OECD now expects the U.S. economy to grow by only 1.6% in 2025, down sharply from the earlier forecast of 2.2%. Growth for 2026 has also been trimmed slightly to 1.5% from 1.6%. This revision highlights the significant drag that tariffs and trade tensions are placing on U.S. economic performance.
Globally, the growth forecast has been lowered from 3.1% to 2.9% for 2025, and from 3.0% to 2.9% for 2026. The slowdown is mainly concentrated in North America—especially the U.S., Canada, and Mexico—while other regions face milder downward revisions.
The Euro area’s growth forecast remains steady at 1.0% for 2025 and 1.2% for 2026. China’s growth outlook has been slightly reduced to 4.7% in 2025 and 4.3% in 2026. The UK’s forecast was cut to 1.3% for 2025 and 1.0% for 2026. Japan’s 2025 growth forecast fell to 0.7%, but its 2026 forecast was raised slightly to 0.4%.
The OECD warns that if trade barriers increase further, the global economy could face even more severe setbacks. Higher tariffs disrupt supply chains, increase inflationary pressures, and shake financial markets. The organization urges countries to seek agreements to avoid further trade fragmentation, which is crucial for stabilizing growth in the coming years.
Read more:
