OECD Warns: Trade Tensions to Hit 2026 Growth, 7 Points

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Global Economy Faces 19.5% Tariff Shock Despite 2025 Resilience – OECD

1. OECD’s Global Growth Forecasts

1. Organisation for Economic Co-operation and Development (OECD) revises 2025 global growth to 3.2% (up from earlier estimates).

2. Predicts 2026 slowdown to 2.9%.

   • Driven by higher US tariffs and uncertainty.

Table: Global Growth Outlook (OECD)

2. Tariff Impact: US at Highest Since 1933

1. White House imposes effective tariff rate of 19.5%.

2. Highest tariff burden since the Great Depression (1933).

3. OECD warns full effects yet to be felt.

   • Consumer prices already rising.

   • Spending choices shifting.

3. Key Economic Drivers in 2025

1. United States

   • Boosted by AI-driven investments.

   • Current resilience masks tariff impact.

2. China

   • Supported by fiscal stimulus.

   • Growth shielded short-term.

4. Labour Market & Consumer Trends

1. Unemployment rising across major economies.

2. Job openings declining → sign of weakening demand.

3. Business surveys show moderation in outlook.

4. Consumer behaviour shifting due to higher prices.

5. Inflation & Central Banks Outlook

1. Inflation expected to decline in most big economies.

2. OECD advises central banks to remain vigilant.

3. US Federal Reserve

   • Likely to ease rates gradually in 2026.

   • Dependent on tariffs not triggering new inflation.

6. Risks to Outlook

1. Further trade levies from the US.

2. Resurgence of global inflation.

3. Weakening global trade negotiations.

7. OECD Warning

“It’s a significant hit for the US economy and because the US economy is such an important economy for the rest of the world, this is having implications for many countries.” – Alvaro Santos Pereira, OECD Chief Economist

Disclaimer

This article is for informational purposes only. It does not constitute investment advice. The Profit India is not responsible for any financial decisions taken based on this content.