OECD upgrades global growth forecast to 3.2%, warns tariff shock yet to hit | investingLive
The OECD has upgraded its global growth forecast for 2025 to 3.2%, up from 2.9% in June, citing
- stronger-than-expected resilience in emerging markets,
- AI-driven investment in the U.S.,
- and fiscal support in China.
U.S. growth is now projected at 1.8% this year, above June’s 1.6% forecast, but still well down from 2.8% in 2024.
- Growth in 2026 is expected to slow to 2.9% globally and 1.5% in the U.S.
The organisation cautioned that the impact of sweeping U.S. tariffs—now averaging nearly 20%, the highest since 1933—has yet to be fully felt. While front-loaded trade and investment boosted early 2025 performance, the OECD warned that tariffs are already weighing on spending, labour markets, and consumer prices, with further inflationary effects expected.
Headline inflation across the G20 is forecast at 3.4% in 2025, slightly lower than June’s 3.6% projection.
- U.S. inflation was revised down to 2.7% from 3.2%, but risks remain elevated due to tariffs, fiscal concerns, and financial market repricing.
The OECD also flagged crypto volatility as a stability risk, though it noted AI adoption and easing trade restrictions could provide upside surprises.
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Market-impacts to watch for:
- Emerging-market resilience a positive for EM FX, but inflation pressures from tariffs may tighten policy paths.
- AI investment and China stimulus support near-term optimism for equities , though fiscal and trade risks loom.