OECD Revises Global Growth Outlook to 2.9 Percent

(MENAFN) The Organization for Economic Cooperation and Development (OECD) announced a sharp revision in its global growth outlook on Tuesday, lowering the projected expansion to 2.9% for both 2025 and 2026. This marks a decline from the earlier estimate of 3.1%, driven by escalating trade restrictions, tighter financial conditions, and growing uncertainty in policy environments.

According to the OECD’s latest Economic Outlook report, “The slowdown is concentrated in the United States, Canada, Mexico and China, with other economies expected to see smaller downward adjustments.”

The report highlights a deteriorating global economic landscape characterized by significant rises in trade barriers, less favorable financial conditions, waning confidence among businesses and consumers, and heightened policy risks—all threatening GDP growth.

The OECD warns, "If these trends continue, they could substantially dampen economic prospects. Rising trade costs—particularly in countries implementing new tariffs—are likely to fuel inflation, although this may be partly offset by softer commodity prices."

Additional concerns include the potential for abrupt changes or escalations in trade policies, increased caution from both consumers and businesses, and ongoing adjustments in risk pricing across financial markets.

Inflationary pressures may remain stubbornly high, especially if inflation expectations climb further, the report notes. Yet, it also suggests that prompt removal of trade barriers could enhance growth prospects and alleviate inflation.

The US economy, which expanded by 2.8% last year, is now forecast to grow at a slower pace of 1.6% this year and 1.5% in 2026—revisions from earlier estimates of 2.2% and 1.6%, respectively.

In the Eurozone, growth projections remain steady, with an increase from 0.8% in 2024 to 1% in 2025 and 1.2% in 2026, consistent with the previous outlook.

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