- Global growth to stay under pressure with end of front-loading
- Full effects of US tariff increases yet to be felt, OECD believes
Mysteel: The Organization for Economic Co-operation and Development (OECD) has raised its forecast for global economic growth this year to 3.2%, as against its previous forecast issued in June of 2.9%, according to its latest Economic Outlook report released on 23 September. Its 2026 growth forecast remains at 2.9% however, unchanged from its June projection.
The OECD explained that in the first half of this year, global growth was more resilient than anticipated, especially in many emerging-market economies, mainly thanks to the front-loading of goods production and trade ahead of the introduction of higher US tariff rates.
During the January-June half, industrial production growth had exceeded the average pace of 2024 in most G20 economies, and global merchandise trade grew rapidly, partly influenced by the spike in goods shipments to the United States, the organisation noted.
Meanwhile, strong investment growth in high technology sectors boosted outcomes in the United States, and fiscal support in China outweighed the drag from trade headwinds with the United States and the ongoing weakness of China’s property market.
Among the major economies, annual GDP growth in the United States is expected to reach 1.8% in 2025, higher than the forecast of 1.6% in June, while US economic growth for 2026 may slow to 1.5%, unchanged from the previous estimate, with the impact of higher tariff rates and a drop in net immigration.
China’s economic growth is projected to reach 4.9% this year and 4.4% in 2026, higher than the projections of 4.7% and 4.3% in June, according to the report.
The forecast for GDP growth in the Eurozone has been raised to 1.2% in 2025 from the previous forecast of 1% issued in June, with increased trade friction and geopolitical uncertainty partly offset by easier credit conditions. However, 2026 growth is now estimated at 1%, lower by 0.2 percentage points compared with the June projection.
The OECD warned in the report that global economic growth remains under pressure with the end of front-loading, as higher tariff rates and considerable policy uncertainties may dampen investment and trade.
US bilateral tariff rates have increased on almost all countries since May, and the overall effective US tariff rate rose to an estimated 19.5% at the end of August, the highest since 1933, the report showed.
The report also pointed out that the full effects of the tariff increases have yet to be felt, as many changes are being phased in over time, and companies had initially absorbed some of the increases by compressing their profit margins. Nonetheless, the effects are becoming increasingly visible in spending choices, labour markets, and consumer prices, it warned.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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