FX.co ★ OECD Lowers Growth Outlook Amid Trade Tensions

The global economy is anticipated to experience a slowdown this year, with growth projected at 2.9% for both 2025 and 2026, compared to last year's 3.3%, as reported by the OECD. This tempered outlook is largely attributed to increasing global uncertainties, primarily spurred by evolving trade policies in the United States under President Trump. The report cautions that the introduction of additional trade barriers could further impede growth, diminish incomes, and hinder job creation. In the US, growth is expected to fall to 1.6% this year, a significant decrease from 3.3% in 2024, influenced by tariffs, reduced immigration, and cuts in government jobs. Mexico and Canada, due to their strong trade connections with the US, are also likely to experience slower growth. Additionally, the OECD notes that as countries increase tariffs, heightened trade costs will contribute to rising inflation, albeit partially mitigated by weaker commodity prices. While inflation is subsiding in many regions, service prices remain persistently high. Rising government expenditure, particularly in defense, needs to be carefully regulated.