OECD lowers global growth projections over tariffs, uncertainty

PARIS: Trade tensions and geopolitical uncertainties are weighing on economic perspectives, the Organisation for Economic Co-operation and Development said on Monday as it lowered its projections for global growth in 2025.

“We are navigating troubled waters,” said the OECD’s chief economist Alvaro Santos Pereira as he summed up the world’s economic situation in the coming months, with inflation set to rise.

US President Donald Trump’s return to the White House is in part responsible for the coming turbulence, the OECD said in its report, with his protectionist policies sparking trade wars and driving up inflation.

While global economic activity remained “resilient” in 2024 with a 3.2 percent increase in GDP, the OECD trimmed back its 2025 projection from 3.3 percent growth to 3.1 percent.

That was due to “higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending”.

The Paris-based OECD’s projections were based primarily on weaker expected growth in the United States and the eurozone.

US growth is expected to be 2.2 percent in 2025, down from the OECD’s 2.4 percent projection in December, before falling to 1.6 percent in 2026 — a drop of 0.5 percentage points on the OECD’s previous forecast.

Likewise, the eurozone growth projection is down from 1.3 percent three months ago to just 1.0 percent, but will continue its upward trajectory from 0.7 percent in 2024, reaching 1.2 percent in 2026.