Global growth set to slow in coming years – OECD

The global economy is expected to slow over the coming years as trade barriers, geopolitical tensions, and policy uncertainty continue to weigh on activity, according to the latest OECD Interim Economic Outlook released on Tuesday.

The report projects global growth to ease from 3.3 per cent in 2024 to 3.2 per cent in 2025 and further down to 2.9 per cent in 2026. The slowdown is attributed to the depletion of stockpiles built up ahead of tariff hikes, as well as the ongoing drag from tariffs and investment uncertainty.

Growth in major economies is forecast to weaken, with US GDP projected to decline to 1.8 per cent in 2025 and 1.5 per cent in 2026. The euro area is expected to grow by 1.2 per cent in 2025 and 1.0 per cent in 2026, while China’s growth is seen slowing to 4.9 per cent in 2025 and 4.4 per cent in 2026.

Inflation is projected to ease in most G20 economies as growth moderates and labour market pressures soften. Headline inflation is expected to fall from 3.4 per cent in 2025 to 2.9 per cent in 2026, while core inflation in G20 advanced economies is set to remain broadly stable at 2.6 per cent in 2025 and 2.5 per cent in 2026.

OECD Secretary-General Mathias Cormann warned that the full impact of tariffs and policy uncertainty is yet to be felt and urged governments to resolve trade tensions to preserve the benefits of open and rules-based global trade. OECD Chief Economist Álvaro Santos Pereira emphasised that stronger structural reforms are needed to improve living standards and harness the potential of new technologies such as artificial intelligence.

The report advised central banks to remain vigilant, noting that monetary policy easing should continue where inflation trends towards targets. It also called for fiscal discipline to address high debt levels, stressing the need for credible medium-term adjustments to stabilise public finances.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser