Global GDP growth to slow down to 2.9 pct in 2025, 2026: OECD

PARIS -- Global GDP growth is projected to slow from 3.3 percent in 2024 to 2.9 percent this year and the next year, the Organization for Economic Cooperation and Development (OECD) said on Tuesday.

In its latest Economic Outlook, the OECD revised down its global growth forecast, citing a technical assumption that existing tariff rates as of mid-May will remain in place, despite ongoing legal disputes.

The organization warned that if current trends persist — such as rising trade barriers, tighter financial conditions, weakening business and consumer confidence and increased policy uncertainty — they could significantly undermine global growth prospects.

The OECD projected that the US economic growth will slow significantly to 1.6 percent in 2025 and 1.5 percent in 2026.

Recent soft data indicators, such as surveys of consumer and business sentiment and inflation expectations, suggest a notable cooling of real GDP growth in the United States, the OECD noted.

For the euro area, growth is forecast to reach 1 percent in 2025 and 1.2 percent in 2026, unchanged from previous estimates, as foreign demand gradually recovers. The OECD noted that the region's outlook is supported by easing financial conditions and lower energy prices.

Within the bloc, Germany's economy is expected to expand by 0.4 percent in 2025 and 1.2 percent in 2026.

"The recovery will be driven by domestic demand," the organization noted, adding that private consumption will increase due to low inflation, rising nominal wages and declining domestic policy uncertainty.

As for France, the OECD forecasts GDP growth to slow to 0.6 percent in 2025 amid elevated economic policy uncertainty, before gradually recovering to 0.9 percent in 2026.

Private consumption will become the main growth engine in 2025, as exports will suffer from increased trade tensions and investment will be held back by increased uncertainty, the OECD noted.

However, it predicted that stronger investment and steady consumer spending will help the French economy recover in 2026.

Regarding headline inflation, the OECD said that G20 economies are expected to see their headline inflation moderate from 6.2 percent in 2024 to 3.6 percent in 2025 and further to 3.2 percent in 2026.

"Inflation in G20 countries is expected to moderate gradually through 2026, with the inflationary impact from higher trade barriers offset by lower oil prices," the OECD said in its Outlook.

But OECD's Chief Economist Alvaro Pereira noted that protectionism is adding inflationary pressures, and inflation expectations have risen substantially in several countries.

The US annual inflation is expected to rise sharply to 3.9 percent by the end of 2025 as the tariffs are implemented and passed onto consumers, the OECD noted.

Headline inflation in the euro area is projected to moderate further, the organization said.

Pereira called on governments to work together to tackle uncertainty and pursue reforms to foster growth and jobs.

"Trade agreements to resolve existing tensions and lower or eliminate barriers should be accompanied by more efforts to enhance multilateral cooperation," he said.

He suggested that governments should also tackle domestic challenges to boost growth and durably raise living standards, by fostering business and public investment and by pursuing productivity-enhancing structural reforms to improve the competitiveness of their economies.