NextFin news, The Organisation for Economic Co-operation and Development (OECD) published its Interim Economic Outlook on Tuesday, September 23, 2025, presenting updated analysis and projections for the global economy and G20 countries. The report reveals a deceleration in global economic growth, driven primarily by increased tariffs and ongoing trade uncertainties.
According to the OECD, global GDP growth is expected to slow from 3.3% in 2024 to 3.2% in 2025, with a further decline to 2.9% projected for 2026. The report attributes this slowdown to higher tariffs, which have reached an estimated effective rate of 19.5% by the end of August 2025, the highest since the mid-1930s. These tariff increases have led to changes in consumer behavior, labor market softening, and stalled disinflation in many economies.
Specifically, the United States is forecasted to experience a sharp growth decline from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026, influenced by tariff hikes, reduced immigration, and federal workforce cuts. China’s growth is also expected to slow from 4.9% in 2025 to 4.4% in 2026 due to the unwinding of front-loaded trade activities and fading fiscal support. The euro area faces a more moderate slowdown, with GDP growth decreasing from 1.2% in 2025 to 1.0% in 2026 amid trade frictions and geopolitical uncertainties.
Inflation remains a concern, with headline inflation projected to ease from 3.4% in 2025 to 2.9% in 2026. However, core inflation in advanced G20 economies is expected to remain relatively stable, only slightly decreasing from 2.6% to 2.5%. The OECD notes that inflationary pressures could resurface due to persistent services inflation and rising food prices.
The report emphasizes that the full impact of tariff increases is still unfolding, as many measures have been introduced gradually and firms have initially absorbed some costs. Nevertheless, the effects are becoming increasingly visible in labor markets and price dynamics.
To address these challenges, the OECD recommends that policymakers promote transparency and predictability in trade policies, cooperate to ease trade tensions, and maintain monetary policy vigilance to safeguard price stability. It also calls for fiscal discipline to ensure long-term public debt sustainability and stronger structural reforms to boost growth and harness technological advances such as artificial intelligence.
The Interim Economic Outlook was presented by OECD Secretary General Mathias Cormann and Chief Economist Alvaro Pereira during a press conference held at the OECD headquarters. The full report and summary are publicly accessible on the OECD website.
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