FiscalFusion

The world economy has proven surprisingly durable in the face of President Donald Trump’s trade wars, the Organization for Economic Cooperation and Development said Tuesday, upgrading its outlook for global and U.S. economic growth this year; the 38-country OECD now forecasts that the world economy will grow 3.2% this year, down slightly from 3.3% in 2024 but an improvement over the 2.9% it had predicted for 2025 back in June, and it expects global growth to slow to 2.9% next year; the OECD also raised its forecast for U.S.

growth this year to 2%, up from 1.6% in June, though even with the upgrade the American economy would still have grown more slowly than in 2024, when it expanded 2.8%; since returning to the White House in January, Trump has overhauled U.S. trade policy by imposing taxes on imports to build a protectionist wall around the previously open American economy, and while the trade barriers were widely expected to slow growth and raise costs, his tariffs have come in lower than the ones he threatened in the spring, many companies avoided them by importing goods early, and both the U.S.

and global economies are receiving a boost from massive investments in artificial intelligence; “The global economy has been resilient this year, despite concerns about a sharper slowdown in the wake of higher trade barriers and significant policy uncertainty,” OECD Secretary-General Mathias Cormann wrote, though he cautioned that “higher tariffs [are expected] to gradually feed through to higher prices, reducing growth in household consumption and business investment”; the OECD expects China, the world’s second-largest economy, to grow 5% this year, the same as in 2024, and forecasts that the 20 eurozone economies will collectively expand 1.3% in 2025, up from 0.8% in 2024, while India, now the world’s fastest-growing major economy, is expected to grow 6.7% this year, up from 6.5% in 2024..