Trade war cuts global economic growth outlook, warns OECD

Daily Tribune

04-06-2025

AFP | Paris
The OECD slashed its annual global growth forecast yesterday, warning that US President Donald Trump's tariffs blitz would stifle the world economy -- hitting the United States especially hard.
After 3.3% growth last year, the world economy is now expected to expand by a 'modest' 2.9% in 2025 and 2026, the Paris-based Organisation for Economic Co-operation and Development said.
In its previous report in March, the OECD had forecast growth of 3.1% for 2025 and 3.0% for 2026.
Since then, Trump has launched a wave of tariffs that has rattled financial markets.
'The global outlook is becoming increasingly challenging,' said the OECD, an economic policy group of 38 mostly wealthy countries.
It said 'substantial increases' in trade barriers, tighter financial conditions, weaker business and consumer confidence, and heightened policy uncertainty will all have 'marked adverse effects on growth' if they persist.
The OECD downgraded its 2025 growth forecast for the United States from 2.2% to 1.6%.
The world's biggest economy is expected to slow further next year to 1.5%.
Trump, who has insisted that the tariffs would spark a manufacturing revival and restore a US economic 'Golden Age', posted on his Truth Social platform before the OECD report's publication: 'Because of Tariffs, our Economy is BOOMING!'
The OECD holds a ministerial meeting in Paris on Tuesday and Wednesday.
US and EU trade negotiators are expected to hold talks on the sidelines of the gathering after Trump threatened to hit the European Union with 50-percent tariffs.
Rising risks
The OECD slightly reduced its growth forecast for China -- which was hit with triple-digit US tariffs that have been temporarily lowered -- from 4.8 to 4.7% this year.
Another country with a sizeable downgrade is Japan. The OECD cut the country's growth forecast from 1.1% to 0.7%.
The outlook for the eurozone economy, however, remains intact at one-percent growth.