The Organization for Economic Cooperation and Development (OECD) has reduced its forecast for global economic growth due to the ongoing trade tensions led by US President Trump’s administration. The OECD now predicts a 2.9% growth rate this year, down from 3.3% in 2024.
The US economy is expected to experience particularly weak growth, with projections of 1.6% this year and 1.5% in 2026. In contrast, China’s economy is forecasted to grow 4.7% this year and 4.3% in 2026.
Trade tensions have disrupted global supply chains and caused uncertainty among businesses, leading to a drop in economic growth to 0.1% in the first quarter of the year. The OECD attributes this downturn to the ongoing trade war, which has led to frequent changes in tariffs and trade agreements.
According to the OECD, a 10% increase in tariffs on major trading partners could shave 1.6% off US economic growth over two years. On a global scale, this would lead to a contraction of nearly a full percentage point in growth.
The report also highlights the need for leading economies, such as those in the European Union, to invest in green economy initiatives while increasing military spending. Economists are urging countries to reach agreements on trade and increase investment to revive economic growth.
OECD Secretary-General Mathias Cormann emphasized the importance of cooperation among nations to address global trading issues. “Our key recommendation is to engage with each other to address issues in a global trading system cooperatively,” he said.
Source: https://www.nytimes.com/2025/06/03/business/trump-tariffs-oecd.html