Global Economic Slowdown Worsens as OECD Lowers Growth Forecast Over US Trade Policies
Sluggish Global Economic Growth Attributed to Imposed US Tariffs by OECD
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The latest report by the Organization for Economic Co-operation and Development (OECD) paints a dismal picture of the global economy. Trade policies driven by the United States have steered the organization to lower its global growth projection, leading to a predicted downturn.
The OECD, headquartered in Paris, now anticipates a growth of 2.9% in 2025 and 2026, a reduction from its initial expectation of 3.1% this year and 3.0% in 2022. The gloomy outlook for the global economy is mainly due to US trade barriers, tighter financial conditions, eroded confidence, and escalating political uncertainties.
On a national scale, Germany's growth forecast for this year remains stable at 0.4%, while the growth in the US is projected to slow to 1.6% in 2025 and 1.5% in 2026, compared to the previously anticipated 2.2% for 2022.
US President Donald Trump's hardline stance on trade policies has been a constant source of disruption since the commencement of his second term in January. Trump took to Truth Social before the release of the OECD report, claiming, "Our economy is booming because of the tariffs!"
The OECD's report adds to the growing concern that the US tariffs contribute significantly to the global economic slowdown. By raising import costs, these tariffs create inflationary pressures, diminishing consumer purchasing power, and leading to global growth declines.
Sources: ntv.de, AFP
Insights:- The OECD's revised global growth forecast underscores the impact of trade policy uncertainty and higher tariffs on overall economic confidence and trade costs[1][2].- The US, in particular, is expected to suffer from a slowdown in growth due to higher tariffs, which are expected to drive inflation up and weaken economic activity[3][4].- Elevated tariffs could potentially lead to inflation in the US reaching 3.9% by the end of 2025 before a slight improvement in 2026 as growth stabilizes[3][4].
- Amidst the global economic slowdown, debate around the community policy and employment policy may need to address the effects of US trade policies, as they contribute significantly to rising inflation and declining consumer purchasing power, leading to a predicted downturn.
- The ongoing trade disputes in politics, driven by the US, could impact business and finance in various countries, with the OECD's general-news report predicting a slowdown in growth for the US due to higher tariffs, steeper inflation, and weakened economic activity.
