The world economy is slowing down as trade tensions and tighter financial conditions hurt business confidence, the OECD said in its latest report. Global growth is expected to drop to around 3% over the next two years, with the United States, Canada, Mexico, and China facing the biggest slowdowns.
The US economy will see its growth rate cut roughly in half over the next two years compared to 2024 levels. The eurozone will perform somewhat better, with modest improvements expected after a weak performance last year. China’s economy will also cool off, though it will still outpace most other major economies.
OECD Secretary-General Mathias Cormann said the shift from steady growth to uncertainty is hurting trade and investment. “Today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence,” he said, urging governments to work together instead of putting up new trade barriers.
The organization warns that more tariffs and trade disputes could make the slowdown worse by disrupting supply chains and pushing up prices. While inflation should fall in most places, higher trade costs could keep prices up longer than expected across major economies.
OECD Chief Economist Álvaro Santos Pereira pointed to a bigger problem: business investment has been weak since the 2008 financial crisis, holding back long-term growth. He called for policy changes to get companies investing again, especially as government investment stays flat and housing construction falls behind demand.
