A Tale of Two Forecasts: OECD’s Revised Outlook Highlights Worsening Global Picture

A tale of two forecasts emerges from the Organization for Economic Co-operation and Development (OECD), as its revised outlook now highlights a worsening global economic picture compared to its previous report. The OECD has significantly lowered its global economic growth projections, anticipating a decline from 3.3% in 2024 to 2.9% in both 2025 and 2026, a notable reduction from its March estimate of 3.1%.
The OECD’s latest outlook report directly attributes this dim forecast to the “challenging and uncertain environment” created by current trade policies, particularly the imposition of tariffs. It warns that “lower growth and less trade will hit incomes and slow job growth” across nearly all nations. The United States, Canada, Mexico, and China are identified as key contributors to this anticipated global economic slowdown, indicating a broad-based decline.
Furthermore, the OECD highlights that “protectionism” will put pressure on inflation, meaning costs for goods and services will rise. This inflationary trend, coupled with the potential for higher interest rates from central banks like the Bank of Canada, could further burden consumers and businesses. The report underscores how current policies are negatively impacting global economic trends.
To mitigate these widespread negative effects, the OECD suggests that central banks “should remain vigilant” regarding inflation. More broadly, the report advocates for increased investment to stimulate business development and improve public finances. This call for increased investment, however, comes with the caveat that governments already grappling with high debt levels may find it difficult to finance such crucial projects.