OECD Report: Inflation and trade barriers slow down economic growth

The Organization for Economic Cooperation and Development (OECD) has lowered its forecasts for global economic growth. Global GDP will increase by 3.1% in 2025 and by 3% in 2026, which is lower than the December estimates of 3.3%. The reason for the slowdown was the strengthening of trade barriers, geopolitical tensions and political instability, negatively affecting investment and household spending.

Inflation in the G20 countries is expected to reach 3.8% in 2025 and 3.2% in 2026. The forecast for US GDP growth has been lowered to 2.2% in 2025 and 1.6% in 2026. The eurozone economy will grow by 1% in 2025 and 1.2% next year, with the weakest growth in Germany at 0.4% and 1.1%, respectively. Japan will show growth of 1.1% this year and 0.2% next year.

The forecast for China has been improved – 4.8% in 2025, and 4.4% in 2026. India will remain the leader in terms of growth rates, with figures of 6.4% and 6.6% in 2025 and 2026, respectively. 

The OECD warns that increased trade barriers and inflation could slow global economic growth, while increased defense spending will support the economy in the short term, but will increase fiscal pressures in the future.