US economic growth to slow to 1.6 per cent, OECD says

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US economic growth to slow to 1.6 per cent, OECD says

US economic growth will slow to 1.6 per cent this year from 2.8 per cent last year as President Donald Trump’s erratic trade wars disrupt global commerce, leaving businesses and consumers paralysed by uncertainty, the OECD says.

The Organisation for Economic Cooperation and Development forecast the US economy – the world’s largest – will slow further to just 1.5 per cent in 2026.

Trump’s policies have raised average US tariff rates from around 2.5 per cent to 15.4 per cent, the highest since 1938, according to the OECD.

World economic growth will slow to just 2.9 per cent this year and stay there in 2026, according to the forecast. It marks a substantial deceleration from growth of 3.3 per cent global growth last year and 3.4 per cent in 2023.

The world economy has proven remarkably resilient in recent years, continuing to expand steadily in the face of global shocks such as the COVID-19 pandemic and Russia’s invasion of Ukraine.

But global trade and the economic

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have been clouded by Trump’s sweeping taxes on imports, the unpredictable way he’s rolled them out and the threat of retaliation from other countries.

Reversing decades of US policy in favour of freer world trade, Trump has levied 10 per cent tariffs on imports from almost every country. He’s also threatened more import taxes, including a doubling of his tariffs on steel and aluminium to 50 per cent.

Without mentioning Trump by name, OECD chief economist Álvaro Pereira wrote in a commentary to accompany the forecast that “we have seen a significant increase in trade barriers as well as in economic and trade policy uncertainty. This sharp rise in uncertainty has negatively impacted business and consumer confidence and is set to hold back trade and investment.”

China – the world’s second-biggest economy – is forecast to see growth decelerate from five per cent last year to 4.7 per cent in 2025 and 4.3 per cent in 2026.

******** exporters will be hurt by Trump’s tariffs, hobbling an economy already weakened by the collapse of the nation’s real estate market. Some of the damage will be offset by help from the government: Beijing last month outlined plans to cut interest rates and encourage bank lending as well as allocating more money for factory upgrades and elder care, among other things.

The 20 countries that share the euro currency will collectively see economic growth pick up from 0.8 per cent last year to one per cent in 2025 and 1.2 per cent next year, the OECD said, helped by interest rate cuts from the European Central Bank.

The Paris-based OECD, comprising 38 member countries, works to promote international trade and prosperity and issues periodic reports and analyses.

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