The OECD says global economic conditions were fairly resilient in 2024 but the outlook is “softening” this year.
This is being driven particularly by the Trump administration’s new tariff policies.
The OECD’s March 2025 economic overview said the United States and China had robust activity in 2024.
However, recent activity indicators pointed to a softening of global growth prospects.
“Business and consumer sentiment have weakened in some countries, and indicators of economic policy uncertainty have risen markedly around the world,” the report said.
“Significant changes have occurred in trade policies that if sustained would hit global growth and raise inflation.”
The report said Inflationary pressures continued in many countries.
Inflation was projected to be higher than previously expected, but to moderate as economic growth contracted.
“Headline inflation is projected to fall from 3.8 percent in 2025 to 3.2 percent in 2026 in the G20 economies,” the OECD said.
“Core inflation is now projected to remain above central bank targets in many countries in 2026, including the United States.”
Global GDP growth is projected to moderate from 3.2 percent in 2024, to 3.1 percent in 2025 and three percent in 2026.
In particular GDP growth in the US was expected to fall to 1.6 percent in 2026, with European growth at 1.2 percent in the same year. China growth was projected to slow from 4.8 percent this year to 4.4 percent in 2026.
The OECD said the projects were based on the US continuing with bilateral tariffs on key trading partners.
It said, without these measures, economic activity would be stronger and inflation lower in the impacted economies.
“Significant risks remain,” the report said.
“Further fragmentation of the global economy is a key concern. Higher and broader increases in trade barriers would hit growth around the world and add to inflation.
“Higher‑than‑expected inflation would prompt more restrictive monetary policy and could give rise to disruptive repricing in financial markets.”
The full report is on the OECD website.
