Global Economic Outlook Amid U.S. Tariffs and AI Investment

The Organization for Economic Cooperation and Development (OECD) has revised its forecasts for global and U.S. economic growth, attributing the resilience of the world economy to a surge in artificial intelligence (AI) investments and a less severe impact from U.S. tariff hikes than initially anticipated. The OECD now predicts global growth will be 3.2% in 2025, a slight decrease from 3.3% in 2024, and expects U.S. growth to reach 2% this year, up from a previous estimate of 1.6%. This marks a notable slowdown compared to the 2.8% growth recorded in 2024.

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Despite concerns regarding the potential negative impacts of President Donald Trump's trade policies, the OECD noted that the actual tariffs imposed have been lower than expected. Many companies preemptively imported goods before tariffs took effect, mitigating immediate economic disruptions. OECD Secretary-General Mathias Cormann highlighted that while the global economy has shown resilience, higher tariffs are likely to gradually lead to increased prices, which could dampen household consumption and business investment.

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Looking ahead, the OECD forecasts a modest slowdown in global growth to 2.9% in 2026, with a rebound to 3.1% in 2027. The organization cautioned that the ongoing trade tensions could pose risks to this outlook, particularly if investor optimism surrounding AI does not materialize as expected, potentially leading to market corrections. The U.S. economy is projected to grow 2% in 2025, before slowing to 1.7% in 2026. In contrast, China's growth is expected to remain stable at 5% in 2025, but may decline to 4.4% in 2026 as the effects of U.S. tariffs become more pronounced.

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The OECD has raised concerns about the sustainability of U.S. fiscal policy under the Trump administration, citing large budget deficits and rising national debt. It emphasized that significant adjustments will be necessary in the coming years to address these fiscal challenges. The eurozone's growth forecast has also been adjusted to 1.3% for 2025, supported by strong labor markets and increased public spending in Germany, but is expected to moderate to 1.2% in 2026 due to budget tightening in France and Italy.

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• “The global economy has been resilient this year, despite concerns about a sharper slowdown in the wake of higher trade barriers and significant policy uncertainty,” — Mathias Cormann, OECD Secretary-General

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• “The full effects of those higher tariffs since the start of the year will become clearer as firms run down the inventories that they built up,” — Mathias Cormann, OECD Secretary-General

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The OECD's updated economic outlook reflects a complex interplay between U.S. trade policies, global investment trends, and fiscal challenges. While the immediate impacts of tariffs have been less severe than expected, the long-term effects on consumption and investment remain a critical concern for the global economy.

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