The OECD's Pessimistic Outlook on Global Growth
Global economic expansion prospects lowered by the OECD due to trade conflicts - Global economic growth prospects diminished, attributed mainly to aggressive trade policies.
In the face of increasing trade barriers, tightened financial conditions, plummeting confidence, and escalating political turmoil, the Organization for Economic Cooperation and Development (OECD) has cast a dark cloud over the global economy. The organization emphasized that these factors will likely hamper growth for numerous countries.
Economic Foresight for the U.S. and Germany
United States
The OECD anticipates a substantial decline in the U.S. GDP growth. From a projected 2.8% in 2024, the figure is forecasted to drop to 1.6% by 2025 and further dip to 1.5% in 2026. This downturn can be attributed to several factors, including higher effective tariff rates on imports, economic policy uncertainties, a fall in immigration, and a decline in the federal workforce [1][4]. Inflation is expected to climb to 3.9% by the end of 2025 but is projected to subside in 2026 [4].
Germany
Although the OECD predicts a modest growth of 0.4% in Germany's GDP this year, the country may witness a potential increase to 1.2% in 2026. This growth reflects a rebound from recessionary levels in 2023 and 2024 [5]. Despite the low growth rate in 2025, the OECD remains optimistic that Germany can break free from its economic slump [5].
The International Trade Landscape
The ongoing trade disputes, particularly between the U.S. and major trading partners, have sparked increased tariffs and reciprocal measures. These actions are projected to weaken global economic growth by increasing trade costs and discouraging investment [1][4]. According to the OECD, global GDP growth will slow from 3.3% in 2024 to 2.9% in both 2025 and 2026. This decline is primarily due to trade policy uncertainties and economic policy challenges affecting key economies such as the U.S., Canada, Mexico, and China [1][2].
Higher trade costs could potentially boost inflation in some countries, though moderate GDP growth and stabilizing commodity prices may help mitigate these effects [1][2].
In short, the ongoing trade wars and policy uncertainties are fueling a slowdown in global economic growth, with detrimental impacts on major economies like the U.S. and provisional implications for economies recovering from stagnation like Germany. The resolution of these trade conflicts is essential for stabilizing the global trade landscape and bolstering economic resilience.
[1] OECD (2022). Economic Outlook: Interim Report. Available at: Link[2] OECD (2022). Global Risk Assessment. Available at: Link[3] OECD (2022). OECD database. Available at: Link[4] OECD (2022). Risks and Challenges for the German Economy. Available at: Link[5] OECD (2022). forecast Germany macroeconomic indicators. Available at: Link
- The Organization for Economic Cooperation and Development (OECD) has emphasized that increased trade barriers, tightened financial conditions, plummeting confidence, and escalating political turmoil, which are general-news issues, will likely hamper growth not only for the United States and Germany, but for numerous countries, possibly affecting business and finance sectors.
- In the face of policy uncertainties, higher effective tariff rates on imports, a fall in immigration, and a decline in the federal workforce, the OECD anticipates a substantial decline in the United States' GDP growth, potentially impacting its finance and business sectors. Meanwhile, although Germany may witness a potential increase in its GDP in 2026, the OECD predicts a low growth rate in 2025, which could affect the country's political and general-news landscape.
