Organization of Economic Co-operation and Development or OECD has stated in a latest update today that global GDP growth is projected to slow from 3.3% in 2024 to 2.9% this year and next year (based on the assumption that tariff rates as of mid-May are sustained). The slowdown is concentrated in the United States, Canada, Mexico and China, with other economies expected to see smaller downward adjustments.
The global outlook is becoming increasingly challenging. Substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth. If these trends continue, they could substantially dampen economic prospects. Rising trade costs—particularly in countries implementing new tariffs—are likely to fuel inflation, although this may be partly offset by softer commodity prices. Risks to the outlook remain substantial.
Key concerns include further escalations or sudden shifts in trade policies, more cautious behaviour from consumers and businesses, and continued repricing of risk in financial markets. Inflation may also stay elevated for longer than anticipated, especially if inflation expectations continue to rise. Central banks should remain vigilant to ensure disinflation in times of heightened uncertainty and increased trade costs. Provided trade tensions do not intensify further and inflation expectations remain anchored, policy rate reductions can continue in economies where inflation is projected to moderate.