Back to today’s briefing

Story perspectives

OECD Cuts Global Growth Forecast Amid Trade Tensions

6/4/2025

28 3

Summary

OECD Lowers Growth

The OECD revised global economic growth forecasts down to 2.9% for 2025 and 2026, from 3.3% in 2024.
Canada, the U.S., Mexico, and China are projected to face the steepest declines.
Canada’s growth may drop to 1% in 2025 due to trade tensions and labor market challenges.
Increased tariffs may exacerbate inflation and disrupt global supply chains, according to the OECD.

Summary

Bank Maintains Rates

The Bank of Canada is likely to keep interest rates at 2.75% due to Q1 2025 GDP growth of 2.2%.
Economists foresee possible rate cuts later this year amid trade uncertainties and a rising unemployment rate of 6.9%.
Elevated core inflation complicates immediate rate cut decisions despite positive economic indicators.
Analysts warn that current growth may hide vulnerabilities, predicting a technical recession if GDP falls in Q2 and Q3.

History

Historical Context

The OECD's revised global growth forecasts echo historical trends of economic downturns triggered by trade tensions, reminiscent of the 1930s Great Depression. During that era, protectionist policies stifled trade and exacerbated economic woes, a pattern now resurfacing as tariffs and supply chain disruptions threaten recovery.

1 of 3

OECD Lowers Growth

The OECD revised global economic growth forecasts down to 2.9% for 2025 and 2026, from 3.3% in 2024.
Canada, the U.S., Mexico, and China are projected to face the steepest declines.
Canada’s growth may drop to 1% in 2025 due to trade tensions and labor market challenges.
Increased tariffs may exacerbate inflation and disrupt global supply chains, according to the OECD.

1 / 3