The global economy is poised to achieve steady growth in the next two years if renewed protectionism does not derail the recovery in global trade, the Organization for Economic Co-operation and Development said on Wednesday.
The Organization for Economic Cooperation and Development confirmed in its latest economic forecasts that the global economy is about to grow by 3.2% this year and 3.3% in 2025 and 2026, as low inflation rates, job growth, and lower interest rates help compensate for financial tightening in some countries.
Its latest forecast was broadly in line with its last revision dating back to September when it forecast growth of 3.2% this year and next and did not yet have a forecast for 2026.
The Organization for Economic Cooperation and Development said that global trade, after faltering last year, has begun to recover, and volume growth is scheduled to reach 3.6% next year, despite the increasing number of measures to restrict the flow of imports.
“Escalating trade tensions and further moves toward protectionism could disrupt supply chains, raise consumer prices, and negatively impact growth,” according to the OECD.
Global trade prospects have become cloudy since US President-elect Donald Trump intensified his calls to raise tariffs on various major trading partners.
As a cold labor market slows consumer spending, the OECD expects growth in the United States to slow from 2.8% this year to 2.4% in 2025 and 2.1% in 2026.
In China, the world’s second-largest economy, growth is expected to slow from 4.9% in 2024 to 4.7% in 2025 and 4.4% in 2026 despite monetary and fiscal easing as consumer spending remains sluggish due to higher rainy-day savings.
Meanwhile, in the euro zone, investment is expected to benefit from central bank easing of monetary policies, and tight labor markets will support consumer spending, pushing growth up from 0.8% this year to 1.3% in 2025 and 1.5% in Year 2026.
Growth in the UK is expected to rise from 0.9% this year to 1.7% in 2025, as real income gains and increased public spending help offset the impact of higher taxes, before growth declines to 1.3% in 2026.
Thanks to economic stimulus measures, the Japanese economy is expected to recover from a 0.3% contraction this year to 1.5% growth in 2025 before declining to 0.6% in 2026.
With inflation declining, most major central banks should continue to carefully ease monetary policy, with the exception of Japan, the OECD said.
With the public finances of most governments under pressure, the OECD said they need to take decisive action to stabilize their debt burdens.
