World Is Facing Dangers From Trade Tensions to Debt, OECD Warns
BloombergDec 07, 2024
OECD Projects Global Economy to Grow 3.3% in 2025-2026, Warns of Risks
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Above: OECD Secretary-General Mathias Cormann during a Bloomberg Television interview at the COP29 climate conference in Baku, Azerbaijan, on Tuesday, Nov. 12, 2024. Image copyright: Andrew Harnik/Poll/AFP via Getty Images
The Facts
The Organization for Economic Cooperation and Development (OECD) said in its latest Economic Outlook, published on Wednesday, that real global GDP growth is projected to reach 3.3% both in 2025 and 2026, up from 3.2% this year.
According to the forecast, OECD economies will grow 1.9% in both years — below pre-pandemic averages — while G20 economies will see a growth of 3.3% in 2025 and 3.2% in 2026.
The quarterly report, which assumes no changes in trade policies, highlights significant challenges such as geopolitical tensions, growing government deficits, and an expected rise in tariffs, but also potential surprises on the upside.
The Spin
Narrative A
As Donald Trump prepares to take office for a second term at the White House, a forecast that assumes no changes in trade policies is set for failure. Rather than a steady growth in the coming years, the global economy is likely to take a hit from tariffs he has pledged to impose.
Narrative B
Whether you believe that the next Trump administration will harm the world economy or boost GDP growth in the US, the fact is that his trade plans will hardly be implemented in full — let alone cause a macro impact in the near term. If these projections don't stand, other reasons are likely to blame.
