Global economy growth expectations lowered due to ongoing trade conflicts. - Global economic growth forecast is revised downward, attributed to ongoing trade tensions.
Title: Global Economy takes a Hit: OECD Cautions About Slowing Growth Due to Trade Tensions
If you've been following the global economy, brace yourself, because it's not looking all that shiny these days, as per the OECD. They've issued a warning about a major slowdown in the pipeline, mainly due to mountainous trade barriers, fiscal tightening, shaky confidence, and political uncertainties.
As for Germany, they're still sticking to their prediction that the country will grow by 0.4% this year and 1.2% in 2026. The USA, on the other hand, is expected to witness a lukewarm GDP growth of 1.6% in 2025, weaker than the previously forecasted 2.2%. In fact, by 2026, the growth is set to drop further to 1.5%.
You've got President Trump to thank (or blame) for this, as he's been pursuing a hard-hitting trade policy since the beginning of his second term. This has been creating ripples in global supply chains and stock markets. In his social media, he boldly declared before the OECD report was released, "Our economy is booming thanks to tariffs!"
A ministerial gathering of the OECD takes place in Paris on Tuesday and Wednesday. German Federal Minister of Economics, Katherina Reiche, will be present, and it's expected that US and EU representatives will engage in discussions about tariffs on the sidelines.
The OECD chief, Mathias Cormann, urges a collective effort from governments worldwide to tackle the problems in the global trading system in a positive and constructive way. He advocates for keeping markets open and maintains the importance of a rule-based global trading system.
Here's a quick overview of what you need to know:
- OECD issues a warning of slowing global economic growth due to rising trade barriers, policy uncertainty, and shifting economic conditions
- USA's GDP growth is expected to decline to 1.6% in 2025 and 1.5% in 2026, primarily due to higher tariffs, retaliatory measures, and policy uncertainty
- Germany's economic outlook remains steady at 0.4% in 2022 and 1.2% in 2026, supported by easing financial conditions and lower energy prices
- The global economy is expected to grow at 2.9% in both 2025 and 2026, dampened by weaker confidence and uncertainty
- Governments worldwide are encouraged to cooperate and work towards maintaining an open, rules-based global trading system.
[Head's up! This synopsis provides additional insights:
- The slowdown in global growth is projected to be 0.4 percentage point lower than the OECD's April 2023 outlook.
- The OECD's projections assume that tariff rates in mid-May 2025 will remain in place, even though legal disputes continue.
- The U.S. economy is forecast to be more affected than the Euro area due to higher tariffs, less favorable regional dynamics, and reduced immigration.]
The OECD has emphasized the need for governments worldwide to actively engage in the exchange of information concerning trade policies and economic indicators, to tackle the problems in the global trading system in a collaborative and constructive manner. The ongoing trade tensions, such as those pursued by the US under President Trump, have been a significant factor in the projected slowdown of the global economy, jeopardizing growth predictions for countries like the US and Germany.
