WASHINGTON (AP) — The Organization for Economic Cooperation and Development (OECD) on Tuesday updated its forecast for global economic growth, suggesting a resilience in the face of President Donald Trump’s trade policies. The organization expects global growth to reach 3.2% this year, a modest adjustment indicating both optimism and underlying challenges.
This revision is significant as it reflects the complex interplay between trade policies and economic performance. Amid ongoing concerns about the impact of tariffs and trade wars, the OECD’s upgraded predictions offer a glimpse of stability in an otherwise uncertain landscape. The results carry implications for businesses and policymakers as they navigate the effects of these trade dynamics on household and business investments.
Key Developments
- The OECD predicts global economic growth at 3.2% for 2023, a decrease from 3.3% in 2024 but an improvement from previous forecasts of 2.9%.
- U.S. growth is anticipated to be 2%, a rise from June’s prediction of 1.6%, yet trailing behind 2024’s growth rate of 2.8%.
- The trade barriers established by Trump’s administration have been less severe than initially threatened, aiding much of the resilience in economic performance.
- China, the world’s second-largest economy, is forecasted to grow by 5% this year, maintaining the same rate through 2024.
- India is projected to be the fastest-growing major economy, expected to see growth of 6.7% in 2023, slightly up from 6.5% in 2024.
Full Report
Despite challenges stemming from trade wars and heightened policy uncertainty, the OECD reports a resilient global economy. Key factors promoting this growth include lower-than-anticipated import taxes and significant investments in artificial intelligence. OECD Secretary-General Mathias Cormann noted that, while the global economy remains robust, there is a cautionary outlook regarding the gradual impact of higher tariffs. He highlighted concerns that these trade barriers might eventually translate into increased prices, which could hinder growth in both household consumption and business investments.
Additionally, the OECD’s report provides insights into the broader economic landscape, projecting the 20 eurozone economies to grow by 1.3% in 2025, an uptick from previous estimates of 0.8%. This indicates a cautiously optimistic outlook as Europe grapples with its own economic hurdles.
Context & Previous Events
In January, President Trump restructured U.S. trade policy, aiming to establish a protectionist framework by imposing various import taxes. These changes were initially expected to slow economic growth and increase costs for consumers and businesses alike. However, the lower-than-expected tariffs and proactive adjustments by companies have mitigated some of the anticipated impact, contributing to the improved economic outlook presented by the OECD.
