The global economy has held up better than many feared this year, but cracks are still visible beneath the surface, the Organization for Economic Co-operation and Development (OECD) warned in its latest Economic Outlook, according to a press release. The report projects global growth easing from 3.2% in 2025 to 2.9% in 2026, before nudging back up to 3.1% in 2027, with major economies slowing at different speeds.
Growth in the United States is expected to slip from 2.0% in 2025 to 1.7% in 2026 and 1.9% in 2027. The euro area is seen expanding by just 1.3% next year and hovering around that level through 2027, while China’s growth is forecast to cool from 5.0% to 4.3% over the same period. On the upside, G20 inflation is projected to ease from 3.4% this year to 2.9% in 2026 and 2.5% in 2027, with most major economies expected to get back to target by mid‑2027.
OECD Secretary‑General Mathias Cormann said the outlook remains fragile and called for countries to lower trade tensions and policy uncertainty. He urged governments to restore fiscal discipline in the face of high public debt, rising defence costs and ageing populations, and to push structural reforms that cut red tape, simplify rules and open up service sectors to more competition. Supportive macroeconomic policies, easier financial conditions and investment in AI‑related technologies have helped prop up demand so far.
At the same time, the OECD flagged mounting risks from higher tariffs, which are increasingly visible in business costs and consumer prices, especially in the United States. Global trade growth has cooled, job openings have fallen back to pre‑COVID levels, and stretched asset valuations leave markets vulnerable if growth or AI returns disappoint or inflation flares again. The report also points to the volatility of crypto‑assets and the growing links between non‑bank financial institutions and traditional finance as emerging stability concerns.
The OECD says central banks should stay alert and be ready to adjust interest rates as inflation risks shift, continuing rate cuts where price pressures are clearly easing. Governments, for their part, are urged to tighten budgets in smart ways—containing and reallocating spending, improving public‑sector efficiency and optimizing revenues—while still protecting the most vulnerable and supporting sustainable, long‑term growth.
