The Organisation for Economic Co-operation and Development (OECD) revised its U.S. and global economic growth forecasts downward, pointing to the widespread and ongoing impact of tariffs as a key driver of the economic slowdown. The latest outlook marks a sharp shift from the group’s already cautious stance just three months ago, now reflecting a far more pessimistic view of the global economy’s trajectory.
According to the OECD, the combination of escalating trade barriers, tightening financial conditions, declining confidence among businesses and consumers, and a generally uncertain policy environment all pose serious risks to growth. The organization warned that if these dynamics persist, they could significantly weaken economic prospects worldwide.
The numbers show the stark change in expectations. Global GDP growth is now forecast at just 2.9% for 2025, down from 3.1% in the March projection, and 2.9% for 2026, down from 3.0%. For the United States, the OECD now expects growth to slow to 1.6% in 2025 and to 1.5% in 2026, compared to previous forecasts of 2.2% and 1.6%, respectively.
Adding to the concern, the OECD highlighted a growing risk that inflation could remain stubbornly high. For its 38 member countries, inflation is now expected to average 4.2% in 2025 half a percentage point higher than the forecast released six months earlier.
The forecast remains highly contingent on one of the most uncertain aspects of the current global economic environment: the future of tariffs. Whether trade restrictions remain in place at their current levels or are rolled back will have a significant influence on the path of growth and inflation in the years ahead.
In its report, the OECD notes that a reversal of recent trade barriers could provide a much-needed boost to economic activity and help ease some of the inflationary pressure that’s been weighing heavily on global markets.
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