Global growth slowdown prediction

Global economic prospects are weakening, with substantial barriers to trade, tighter financial conditions, diminishing confidence and heightened policy uncertainty projected to make an adverse impact on growth, according to the OECD’s latest Economic Outlook in June 2025. Working with over 100 countries, the OECD is a global policy forum.

The Outlook projects global growth to slow from 3.3% in 2024 to 2.9% in 2025 and 2026. The slowdown is expected to be most concentrated in the United States, Canada, Mexico and China, with smaller downward adjustments in other economies.

“GDP growth in the United States is projected to decline from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026. In the euro area, growth is projected to strengthen modestly from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026. China’s growth is projected to moderate from 5.0% in 2024 to 4.7% in 2025 and 4.3% in 2026,” said the OECD. 

Assessing the risks

Inflationary pressures have also resurfaced in some economies. Higher trade costs in countries raising tariffs are expected to push inflation up further, although the impact will be partially offset by weaker commodity prices. Annual headline inflation in the G20 economies is collectively expected to moderate from 6.2% to 3.6% in 2025 and 3.2% in 2026, said the OECD.

The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” OECD Secretary-General, Mathias Cormann, explained. “Our latest economic outlook shows that today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects. Governments need to engage with each other to address any issues in the global trading system positively and constructively through dialogue – keeping markets open and preserving the economic benefits of rules-based global trade for competition, innovation, productivity, efficiency and ultimately growth.”

To read the rest of this article in ISMR's July/August 2025 issue, see https://joom.ag/41wd/p6