Source: Organization for Economic Cooperation and Development (OECD), OECD Economic Outlook, Interim Report March 2025 (Paris: OECD, 2025).
Commentary: Following a year of steady growth, during which global gross domestic product (GDP) grew by 3.2 percent, the OECD has tempered expectations for international economic growth in 2025. The OECD now expects global GDP to grow by 3.1 percent this year, reduced from the previous projection of 3.3 percent. The OECD also reduced its 2026 GDP growth projection to 3.0 percent. In an interim report published this month, the OECD cites several reasons for reducing its projection, chief among them being heightened trade barriers. Trade barriers such as tariffs will increase inflation and consumer uncertainty, reducing consumption and investment. Though headline inflation, which includes all goods, is projected to fall over the next two years, underlying inflation, which excludes volatile goods such as food and energy, is expected to remain above central bank target rates in several countries. In light of heightened trade restrictions under the Trump administration, including a possible 25 percent tariff on all goods from Canada and Mexico, the OECD predicts U.S. economic growth will decline from 2.8 percent (2024) to 1.6 percent by 2026.
