The Organisation for Economic Cooperation and Development (OECD) has projected steady growth in the global economy over the next two years, barring any resurgence in protectionism that could impede the recovery in global trade.
The OECD forecasts a 3.2% growth in the world economy for this year and 3.3% for 2025 and 2026, citing factors such as lower inflation, job creation, and interest rate cuts counterbalancing fiscal tightening in certain nations.
Despite concerns over rising trade tensions and protectionist measures impacting global supply chains and consumer prices, the OECD anticipates a rebound in global trade, with trade volumes expected to grow by 3.6% next year.
Meanwhile, the economic outlook remains uncertain, particularly with U.S. President-elect Donald Trump’s push for tariff increases on major trading partners.
The OECD also projects a slight moderation in U.S. growth from 2.8% this year to 2.4% in 2025 and 2.1% in 2026, attributed to a cooling job market affecting consumer spending.
In China, despite monetary and fiscal easing measures, the second-largest economy is expected to experience a slowdown in growth from 4.9% in 2024 to 4.7% in 2025 and further to 4.4% in 2026. This deceleration is attributed to slow consumer spending caused by significant high levels of rainy-day savings.
In the eurozone, the OECD foresees an uptick in growth from 0.8% this year to 1.3% in 2025 and 1.5% in 2026, supported by central bank easing and robust labor markets boosting consumer spending.
UK growth is predicted to rise from 0.9% this year to 1.7% in 2025 before moderating to 1.3% in 2026, driven by real income gains and increased public spending.
Japan is expected to rebound from a 0.3% contraction this year to 1.5% growth in 2025, before easing to 0.6% in 2026, buoyed by economic stimulus measures.
The OECD suggests that most major central banks will continue to cautiously ease monetary policy, except for Japan, emphasizing the need for governments to take decisive actions to stabilize their debt burdens, given the strain on public finances.
