The OECD has downgraded its global growth forecast for 2025 and 2026, reducing the 2025 estimate to 3.1% from 3.3%. This change is largely attributed to tariffs initiated by President Trump, which may hinder economic growth and lead to declines in specific countries, particularly Mexico. India is expected to grow at the fastest rate among major economies during this period.
The Organisation for Economic Co-operation and Development (OECD) has revised its global growth forecasts downward for 2025 and 2026, attributing this adjustment partly to the tariffs imposed by United States President Donald Trump. In a report released on Monday, the OECD now predicts a global growth rate of 3.1% for this year, a decrease from the earlier forecast of 3.3%. Moreover, the predicted growth for 2026 has been lowered to 3.0%.
The OECD report indicates that recent indicators suggest a decline in global growth prospects. It highlights high policy uncertainty and the significant risks posed by the potential fragmentation of the global economy. If additional tariffs on non-commodity imports and exports between the United States and other nations are implemented, the global output could decrease by approximately 0.3% by the third year following these actions.
A simulation analyzing a scenario where 10% tariffs are enacted posits that Mexico may be severely impacted, with an estimated 1.3% decline in growth anticipated by year three. In contrast, the United States could experience a decline of around 0.72%. The OECD has noted that agreements aimed at reducing tariffs might lead to stronger global growth conditions.
In terms of country-specific forecasts, India is expected to demonstrate the highest growth rates in both 2025 and 2026, estimated at 6.4% and 6.6% real GDP growth, respectively. Conversely, Mexico stands out as a major economy that may face a decline, while Canada could experience stagnant growth. The eurozone is projected to see modest growth, with forecasts of 1.0% for 2025 and 1.2% for 2026.
In summary, the OECD has revised its global growth forecasts, indicating a cooling economic outlook influenced by tariffs from the United States. Key highlights include a projected global growth rate of 3.1% in 2025 and concerns regarding potential economic fragmentation. The simulations indicate adverse effects particularly for Mexico, while India is anticipated to lead growth among major economies. Overall, the insights underscore the impact of trade policies on global economic conditions.
Original Source: gna.org.gh
