OECD Trims Global Growth Forecast Amid Trade Tensions

The Organisation for Economic Co-operation and Development (OECD) has revised its global growth forecast for 2025 downward to 3.1%, a reduction from the previous 3.3% projection. The adjustment comes in response to escalating trade barriers and geopolitical uncertainties, particularly driven by the protectionist policies of US President Donald Trump. The OECD also lowered its 2026 growth forecast to 3%, citing weaker investment and household spending due to heightened uncertainty 1 2 3.

Trade Wars and Inflation Concerns
The OECD highlighted that the resurgence of trade tensions, including tariff hikes by the US and retaliatory measures from other nations, is a significant factor behind the downgraded forecasts. These trade barriers are expected to weigh heavily on global economic activity, with inflation projected to rise higher than previously anticipated. The organization warned that a broader trade war could further dampen growth and exacerbate inflationary pressures 2 3 7.

Regional Growth Divergences
While the global outlook has weakened, the OECD noted varying growth trajectories across regions. The US is expected to grow at 2.2% in 2025, down from the earlier 2.4% forecast, while the eurozone is projected to expand by just 1%. Emerging markets like China, however, are expected to remain resilient, with growth forecasts revised upward to 4.8% for 2025. Countries like Canada and Mexico are anticipated to bear the brunt of the trade war, with Mexico facing a contraction of -1.3% in 2025 3 5 6.

Spain’s Economic Resilience
In contrast to the broader global slowdown, Spain’s economy is expected to grow by 2.6% in 2025, an upward revision from earlier estimates. The country’s resilience is attributed to its strong domestic demand and limited exposure to the current trade tensions. However, the OECD cautioned that Trump’s threats to impose higher tariffs on Spanish exports could pose risks in the future 5.

AIgnite Opinion
The OECD’s revised forecasts underscore the fragility of the global economy in the face of rising protectionism and geopolitical instability. While emerging markets like China and Spain show resilience, the broader slowdown in advanced economies highlights the far-reaching consequences of trade wars. Policymakers must prioritize de-escalation and multilateral cooperation to mitigate the risks of further economic fragmentation.

Key Takeaways

• Global growth for 2025 has been revised down to 3.1%, with 2026 growth projected at 3% 1 2 3.
• Trade barriers and geopolitical uncertainty are major factors behind the downgrade 2 3 7.
• The US and eurozone are expected to see slower growth, while China and Spain remain resilient 3 5 6.
• Mexico and Canada are particularly vulnerable to the trade war, with Mexico facing a contraction in 2025 5 6.
• A broader trade war could exacerbate inflationary pressures and further dampen global growth 3 7.