OECD Lowers Global Growth Forecast
(MENAFN) On Tuesday, the Organization for Economic Cooperation and Development (OECD) revised its projections for worldwide economic growth, reducing the forecast to 2.9 percent for both 2025 and 2026.
This marks a decline from the earlier estimate of 3.1 percent, primarily attributed to increasing trade restrictions, more stringent financial conditions, and growing unpredictability in policy decisions.
According to the OECD’s most recent Economic Outlook report, “The slowdown is concentrated in the United States, Canada, Mexico and China, with other economies expected to see smaller downward adjustments.”
This highlights that the economic deceleration is largely focused on these major economies, while other regions are likely to experience less pronounced declines.
The organization emphasized that the global economic landscape is becoming more difficult, driven by significant hikes in trade barriers, tighter financial environments, diminished confidence among businesses and consumers, and heightened uncertainty about future policies.
These factors collectively threaten the pace of global GDP expansion.
The report warns that if these conditions persist, they “could substantially dampen economic prospects.”
It explains that increased trade costs, particularly in nations imposing new tariffs, are expected to contribute to inflationary pressures.
However, this impact might be partially mitigated by weaker commodity prices.
Among the main risks ahead are potential escalations or abrupt changes in trade regulations, more conservative behavior from both consumers and businesses, and ongoing adjustments in financial market risk valuations.
These elements could further complicate economic growth prospects.
Furthermore, the report notes that inflation levels may remain high for a longer duration than initially anticipated, especially if inflation expectations continue to rise.
Despite these challenges, the OECD suggests that removing trade barriers promptly “may boost economic growth and help ease inflationary pressures,” offering a hopeful pathway forward.
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