The Organisation for Economic Co-operation and Development (OECD) revised its global economic outlook upwards on Tuesday, citing stronger-than-anticipated resilience across several economies in 2025.
The OECD now forecasts the world economy to expand by 3.2% this year, an improvement from the 2.9% projection released in June. The outlook for 2026 remains unchanged at 2.9%, which still represents a slowdown from the 3.3% growth recorded in 2024.
“Global growth was more resilient than anticipated in the first half of 2025, especially in many emerging-market economies. Industrial production and trade were supported by front‑loading ahead of higher tariffs. Strong AI-related investment boosted outcomes in the United States and fiscal support in China outweighed the drag from trade headwinds and property market weakness,” wrote OECD in its September report.
In its updated analysis, the OECD anticipates U.S. GDP growth to decelerate sharply — falling from 2.8% in 2024 to 1.8% in 2025, and to 1.5% in 2026. However, a 1.8% projection in 2025 was higher than a 1.6% estimate in June’s report. While robust investment in advanced technology sectors is expected to continue, the positive impact will be outweighed by higher tariff rates and a reduction in net immigration, according to the report.
GDP growth in the euro area is set to reach 1.2% next year and ease to 1.0% in 2026, as escalating trade tensions and geopolitical risks are partly mitigated by looser credit conditions. Meanwhile, China’s economy is projected to expand 4.9% in 2025 (+0.2pp from June report) before slowing to 4.4% in 2026 (+0.1pp from June report). The OECD attributes China’s easing momentum to the fading effects of earlier stimulus, increasing tariffs, and diminishing fiscal support.
The report notes that the complete impact of raised tariffs has yet to fully materialize, since many measures are being implemented gradually, and companies initially offset some of the pressure through reduced profit margins. Nevertheless, the effects are becoming more evident in consumer spending patterns, labor markets, and prices, the OECD said.
Risks to the outlook continue to loom. Further increases in tariffs, a resurgence of inflation, heightened fiscal concerns, or abrupt repricing in financial markets could all potentially undermine global growth, the OECD warned. Additionally, the volatility in crypto-asset markets could threaten financial stability, given their growing ties to the traditional financial system. Conversely, easing trade restrictions or a more rapid adoption of artificial intelligence could present upside surprises for growth.
The OECD stressed that nations should work cooperatively to make global trade policy more predictable and transparent while addressing economic security issues. The organization also advised central banks to stay alert and respond quickly to changes in inflation risks. As long as inflation expectations are stable, policy rate cuts should proceed in economies where inflation is projected to align with targets. Preserving central bank independence, the OECD noted, remains essential to bolstering policy credibility and limiting inflation volatility.
