OECD Revises 2025 Global Growth Forecast Amid US Tariff Concerns

The Organisation for Economic Co-operation and Development (OECD) has revised its global economic growth forecast for 2025, projecting a 3.2% increase in global GDP. This marks an upward adjustment from the previous estimate of 2.9%, reflecting unexpected resilience in the global economy during the first half of the year.

Despite this positive revision, the OECD cautions that the full impact of recent U.S. tariff increases has yet to materialize. As of August 2025, the effective U.S. tariff rate on imports has risen to 19.5%, the highest level since 1933. While many firms have been operating off stockpiled inventories, the OECD anticipates that as these inventories are depleted, the higher tariffs will begin to weigh more heavily on trade and investment.

The OECD's latest Interim Economic Outlook attributes the unexpected economic resilience to several factors, including increased U.S. investment in artificial intelligence and fiscal support in China. However, the organization emphasizes that significant risks remain due to high trade barriers and policy uncertainty, which could dampen investment and trade in the near future.

For individual economies, the OECD projects U.S. growth to decline from 2.8% in 2024 to 1.8% in 2025, before falling further in 2026. China is projected to grow 4.9% in 2025 and 4.4% in 2026. The euro zone’s growth is expected to slow due to trade tensions, while Japan and the UK are expected to see modest gains.

The OECD emphasizes that while the global economy has shown resilience, significant risks remain due to high trade barriers and policy uncertainty, which could dampen investment and trade in the near future.

In the United States, the increase in effective tariff rates is expected to further boost inflation, with the rate of pass-through to final goods prices assumed to strengthen as businesses become less willing to absorb the rising cost of imported goods. As a result, U.S. annual inflation is projected to remain above target throughout 2026.

The OECD's report underscores a complex economic environment where initial resilience masks underlying vulnerabilities. As the full effects of increased U.S. tariffs unfold, global economies must navigate the challenges posed by heightened trade barriers and policy uncertainties.