Trade war cuts global economic growth outlook: OECD

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PARIS: The OECD reduced its annual global growth forecast on Tuesday, warning that US President Donald Trump’s bullets would stop the global economy – especially killing the United States.

The Organization for Economic Cooperation and Development based in Paris said that after a 3.3 percent increase last year, the global economy is now expected to spread “slight” 2.9 percent in 2025 and 2026.

In its previous report in March, the OECD predicted 3.1 percent for 2025 and 3.0 percent for 2026. Only then, Trump has begun a wave of prices that have shaken the financial markets.

“The global approach is becoming increasingly difficult,” said OECD, the economic policy group of 38 most wealthy countries.

The OECD has reduced its 2025 growth forecast for the United States from 2.2 percent to 1.6 percent. The world’s largest economy is expected to slow down next year.

Trump, who has insisted that rates will give rise to manufacturing restoration and will restore the US economic “golden age”, which has been posted on its truthful social platform before the OECD report publication: “Due to taxes, our economy is on the rise!”

The OECD held a ministerial meeting in Paris on Tuesday and Wednesday. And EU trade negotiators are expected to talk to the gathering after Trump threatened to target the European Union with 50 percent of revenue.

A group of seven advanced economies is also organizing a meeting focused on trade.

Pereira said, “It is important to refrain from being more trading pieces over the next few months and years. They have unveiled more prices on dozens of countries but have stopped them by July to allow time to negotiate.

American slowdown

In the OECD report, Pereira warns that “weak economic possibilities will be felt worldwide, without discount.”

“Low growth and low trade will affect income and slowdown in employment,” he added. The point of view in the United States after an expansion of 2.8 % of the economy last year has been “damaged”.

The report states that the effective tariff rate on US trade imports has increased from two percent to 15.4 percent in 2024, the highest since 1938.

The OECD also accused “uncertainty of high economic policy, a significant slowdown in pure immigration and a significant reduction in the federal manpower”. Although it is expected that the annual inflation in a group of 20 economies in 2025 will be “moderate” and up to 3.2 percent in 2026, the United States is “an important exception”.

It is expected that by the end of the year, the US inflation will be less than four percent, which is twice as much as the Federal Reserve target to increase consumer prices.

Rising risks

The OECD slightly reduced its growth forecast for China-which was subjected to triple-digit US revenue, which has been temporarily reduced-has been 4.8 percent to 4.7 percent this year. Another country with a massive lack is Japan.

The OECD reduced the country’s development forecast from 1.1 percent to 0.7 percent.

The euro zone economy, however, continues to grow in one percent of growth. “It is a danger that the uncertainty of the protectionism and trade policy will increase even more and additional trade barriers can be introduced,” he said. “According to our impressions, additional revenue will further reduce global growth prospects and fuel inflation, which will increase global growth.”