Global GDP growth will slow from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026. This will happen due to higher trade barriers in several G20 economies and increasing political uncertainty affecting investment and household spending.
Points of attention
- Trump's trade wars are expected to lead to a decline in global GDP growth and a slowdown in economic growth due to higher trade barriers and political uncertainty.
- Inflation in OECD countries is projected to remain high, with a forecast of further growth in line with expectations as economic growth slows down.
- The OECD highlights significant risks for the global economy stemming from political uncertainty and warns of the negative impact of escalated trade-restrictive measures.
Trump's trade wars will negatively affect the world economy
This is predicted by the Organization for Economic Cooperation and Development (OECD).
Yes, annual real GDP growth in the United States will slow from very high recent rates to 2.2% in 2025 and 1.6% in 2026.
Eurozone real GDP growth is expected to be 1.0% in 2025 and 1.2% in 2026 as rising uncertainty dampens growth.
Growth in China is forecast to slow from 4.8% this year to 4.4% in 2026.
Inflationary pressures persist in many economies, with headline inflation recently rising again in a growing share of economies. Services price inflation remains high, averaging 3.6% across OECD economies.
Inflation is forecast to be higher than previously expected in 2025-26, although still moderate as economic growth slows. Headline inflation is forecast to decline from 3.8% in 2025 to 3.2% in 2026 in the G20 economies.
As noted by the OECD, the high level of geopolitical and political uncertainty currently poses significant risks to the baseline projections. One possible risk is the escalation of trade-restrictive measures.
Global output could fall by about 0.3% by the third year, and global inflation could rise by 0.4 percentage points per year on average over the first three years.
The OECD (Organization for Economic Co-operation and Development) is an international organization that brings together 38 countries that strive for economic development, improved living standards, and the stability of world trade.
The organization includes economically developed countries, including the United States, Canada, Germany, France, the United Kingdom, Japan, and others. The headquarters are located in Paris, France. The OECD publishes reports, conducts research, and advises governments on economic policy.
