The Darkening Economic Horizon: OECD's Latest Growth Projections
Global economic growth expectations have been scaled back by the Organisation for Economic Co-operation and Development (OECD) due to ongoing trade disputes. - Global growth projections reduced by OECD due to escalating trade conflicts
Brace yourselves, folks, the global financial landscape is taking a dramatic turn. According to the OECD (Organisation for Economic Co-operation and Development), the economic outlook is shrouded in clouds due to escalating trade conflicts, tightened fiscal conditions, dwindling trust, and mounting political uncertainties, all of which are expected to chop down growth rates.
In Germany, the economy, as per the OECD's prediction, is estimated to grow by a meager 0.4% this year, aiming for 1.2% by 2026. On the other hand, the US gross domestic product (GDP) is forecasted to expand by a mere 1.6% in 2025, a significant drop from the previously anticipated 2.2%, with 1.5% projected for 2026.
Donald Trump, the current US President, has pursued a harsh trade strategy since the inception of his second term in January, causing tremors in global supply chains and stock markets. In his social media network, Truth Social, he claimed, "Our economy is thriving due to the tariffs!"
A ministerial-level OECD Council meeting is scheduled to take place in Paris on the 13th and 14th of this month. Germany's Federal Minister of Economics, Katherina Reiche, is set to participate. It is believed that US and EU representatives will discuss tariff issues informally during this event.
Mathias Cormann, the OECD's Secretary-General, appealingly urged governments to collaborate in tackling global trading system issues constructively and positively through dialogue, keeping marketplaces open and preserving the economic benefits of a rule-based global trading system.
Key Players and Their Predicted Growth
- United States: The US economy is projected to see a substantial slowdown, with GDP growth decreasing from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026. This dampening growth is due to escalated effective tariff rates, policy uncertainty, and reduced immigration.
- Germany (Euro Area): The OECD does not provide specific growth projections for Germany, but they project the euro area's growth to strengthen modestly from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026.
- Canada: Canada’s GDP growth is estimated to decrease from 1.5% in 2024 to 1% in 2025 due to trade-related hardships.
- Mexico: Mexico is forecasted to experience a steep drop in growth, plummeting from 1.5% in 2024 to 0.4% in 2025, reflecting the impact of trade policies and economic instability.
- China: China's growth is anticipated to decelerate from 5.0% in 2024 to 4.7% in 2025 and 4.3% in 2026, influenced by trade tensions, particularly with the US.
Factors Influencing Growth
- Trade Barriers: Increased tariffs and trade obstacles are significant factors contributing to the slowdown in these economies.
- Policy Uncertainty: A high level of policy uncertainty is negatively impacting growth, particularly in the US.
- Financial Conditions: Tightened financial conditions and diminished confidence exacerbate the challenges faced by these economies.
The Global Economy's Forecast
The global economy is projected to decrease from 3.3% growth in 2024 to 2.9% in both 2025 and 2026. This slowdown is driven by weakened trade, tighter financial conditions, and heightened policy uncertainty.
In the context of the global economic slowdown, the Organisation for Economic Co-operation and Development (ECSC) emphasizes the significance of exchange of information among its member countries, particularly in the realms of business, finance, politics, and general-news. This exchange of information aims to facilitate constructive dialogue and collaborative solutions to address the challenges posed by escalating trade conflicts, tightened fiscal conditions, dwindling trust, and mounting political uncertainties. Moreover, the ECSC calls for its member countries to maintain open marketplaces and preserve the economic benefits of a rule-based global trading system.
