In a recent report, the Organization for Economic Cooperation and Development (OECD) presented a surprisingly resilient outlook for the global economy amid President Donald Trump's trade wars. The organization has upgraded its predictions for economic growth in both the world and the United States for the current year.
The OECD revised its global growth forecast for this year to 3.2%, a slight decline from the 3.3% anticipated for 2024 but an improvement over the 2.9% it had projected in June for 2025. Looking ahead, the OECD expects global growth to slow down to 2.9% in 2026.
For the United States, the OECD has also adjusted its growth estimate for this year to 2%, an increase from the 1.6% projection made in June. Despite this upgrade, the U.S. economy, being the largest in the world, is expected to grow significantly slower in 2025 compared to the growth anticipated for 2024, which is pegged at 2.8%.
Since his return to the White House in January, President Trump has significantly altered U.S. trade policy, implementing taxes on imports to create a protectionist environment around the historically open American economy. These trade barriers were initially expected to hinder growth and increase costs across various sectors. However, tariffs imposed have been lower than the levels threatened during the spring by the Trump administration.
Several companies have managed to circumvent these tariffs by importing foreign goods into the U.S. prior to the onset of the tariffs. Furthermore, the ongoing boom in investments related to artificial intelligence has helped bolster both the U.S. and global economies.
OECD Secretary-General Mathias Cormann remarked on the global economy's resilience this year, despite ongoing worries about a potential sharper slowdown stemming from increased trade barriers and significant policy uncertainties. Nonetheless, he cautioned that higher tariffs are expected to gradually lead to increased prices, which would, in turn, diminish growth in household consumption and business investment.
The OECD further anticipates that China, recognized as the world's second-largest economy, will witness a growth rate of 5% this year, maintaining the same growth forecast for 2024. In contrast, the economies that share the euro currency are expected to expand collectively by 1.3% in 2025, representing a modest improvement from the previous year's growth of 0.8%.
Additionally, India has overtaken China as the world's fastest-growing major economy, with growth projections of 6.7% for the current year, slightly up from the 6.5% predicted for 2024.
This comprehensive overview of the global economic landscape reflects a mixture of optimistic growth forecasts and inherent challenges posed by trade policies and cost pressures. As changes continue to unfold, the impact on households and investment strategies may play a significant role in shaping economic trajectories in the near future.
