The OECD Deepens Pessimism Over Global Growth due to US Trade Policies
Slower Global Economic Growth Attributed to US Import Taxes (Estimate by OECD)
Turns out the Organisation for Economic Co-operation and Development (OECD) isn't feeling too optimistic about the global economy these days. In a stark announcement on Tuesday, the Paris-based organization halved its growth forecast for 2025 and 2026, now expecting a mere 2.9% expansion. Originally, they had projected a 3.1% growth rate for 2025 and a steady 3.0% for 2026, but US trade policies have cast a long shadow over the economic outlook.
But what's causing all this economic gloom, you ask? Simple: significant trade barriers, tighter financial conditions, plummeting confidence, and increased political uncertainty — all of which can be traced back to American tariffs.
The storm clouds have gathered faster than a summer thunderstorm, and the gloomiest forecasts are reserved for the US, Canada, Mexico, and China. If the going gets tough, they're likely to see the slowest growth of all.
The OECD's words were stark: "The global economic outlook is darkening," they said. Sounds like they're expecting a heavy downpour of economic woes.
As for the old world, the organization stuck to its forecast of 0.4% growth for Germany this year, with a slight improvement to 1.2% in 2026. Over in the US, the expected GDP growth has taken a plunge, with estimates now standing at 1.6% for 2025, a far cry from the originally projected 2.2%. In 2026, the GDP is expected to inch up to 1.5%.
The US President, Donald Trump, has been talking tough on trade since the beginning of his second term. He's disrupted global supply chains and stock markets with his hardline policies. Even before the OECD report came out, he declared triumphantly in his online network Truth Social, "Our economy is booming because of the tariffs!"
But as the OECD's downgraded projections suggest, the tariffs might not be all they're cracked up to be. In fact, they could be sowing the seeds of an economic storm.
Sources:
- ntv.de
- AFP
- OECD Economic Outlook
- OECD GDP Growth Projections
In light of the OECD's downgraded economic forecasts, a potential concern for various entities could be the impact of US trade policies on their community and employment policies. For businesses, the uncertain economic climate due to significant trade barriers and increased political uncertainty might necessitate revisions in their finance strategies.
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