WASHINGTON – The OECD slashed its annual global growth forecast on Tuesday, warning that US President Donald Trump’s tariffs blitz would stifle the world economy — hitting the United States especially hard.
After 3.3-percent growth last year, the world economy is now expected to expand by a “modest” 2.9 percent in 2025 and 2026, the Paris-based Organisation for Economic Co-operation and Development said.
In its previous report in March, the OECD had forecast growth of 3.1 percent for 2025 and 3.0 percent for 2026.
Since then, Trump has launched a wave of tariffs that has rattled financial markets.
“The global outlook is becoming increasingly challenging,” said the OECD, an economic policy group of 38 mostly wealthy countries.
It said “substantial increases” in trade barriers, tighter financial conditions, weaker business and consumer confidence, and heightened policy uncertainty will all have “marked adverse effects on growth” if they persist.
The OECD downgraded its 2025 growth forecast for the United States from 2.2 percent to 1.6 percent.
The world’s biggest economy is expected to slow further next year to 1.5 percent.
Trump, who has insisted that the tariffs would spark a manufacturing revival and restore a US economic “Golden Age”, posted on his Truth Social platform before the OECD report’s publication: “Because of Tariffs, our Economy is BOOMING!”
The OECD holds a ministerial meeting in Paris on Tuesday and Wednesday.
US and EU trade negotiators are expected to hold talks on the sidelines of the gathering after Trump threatened to hit the European Union with 50-percent tariffs.
The Group of Seven advanced economies is also holding a meeting focused on trade.
“For everyone, including the United States, the best option is that countries sit down and get an agreement,” OECD chief economist Alvaro Pereira said in an interview with AFP.
“Avoiding further trade fragmentation is absolutely key in the next few months and years,” Pereira said.
Trump imposed in April a baseline tariff of 10 percent on imports from around the world.
He unveiled higher tariffs on dozens of countries but has paused them until July to allow time for negotiations.
The US president has also imposed 25-percent tariffs on cars and now plans to raise those on steel and aluminium to 50 percent on Wednesday.