The global economy has been more resilient than expected in the face of Donald Trump’s tariffs, but is set to slow over the next year, the Organisation for Economic Co-operation and Development (OECD) has warned.
The Paris-based club of industrialised countries has upgraded its projection for global GDP this year, to 3.2% – up from the 2.9% it expected in its last forecast in June.
“Global growth was more resilient than anticipated in the first half of 2025, especially in many emerging-market economies,” it said in its interim economic outlook, adding that “industrial production and trade were supported by front-loading ahead of higher tariffs”.
However, with labour markets in several countries, including the US itself, already slowing and the impact of front-loaded exports waning, the OECD expects weaker global growth of 2.9% in 2026 – the same as in its June forecast.
For the UK, the OECD predicts modestly stronger GDP growth this year of 1.4%, up from 1.3% in its last forecast. However, its projection for next year is unchanged at a relatively sluggish 1% – an unhelpful forecast for the chancellor, Rachel Reeves, as Labour battles to kickstart growth.
The body said Britain’s “tighter fiscal stance” – higher taxes and reduced government spending – was expected to weigh on the economy. Reeves will present her budget, at which she is expected to raise taxes, on 26 November.
If the OECD’s forecasts prove accurate, that would put the UK’s GDP growth rate for next year in the middle of the pack for the G7 nations – behind the US (1.5%), Germany (1.1%) and Canada (1.2%) but ahead of Italy (0.6%), Japan (0.5%) and France (0.9%). This year, the UK is expected to be the second fastest-growing country in the G7, behind the US.
Labour’s target before last year’s general election was to “secure the highest sustained growth in the G7” – though it was unclear over precisely what period.
Trump’s trade policy has shifted repeatedly since he announced a wave of “reciprocal” tariffs on what he called “Liberation Day” in April, targeting particular countries, regions and products.
The OECD estimates the average tariff applied on imports to the US was 19.5% at the end of last month: the highest since 1933.
As a result, and also because of slower net immigration – another Trump policy – the OECD expects US GDP growth to slow, from 2.8% last year to 1.8% this year and 1.5% in 2026. “The impacts of higher tariff rates are yet to be fully felt in the US economy,” it said.
Most major economies have declined to retaliate against the US, which could lead to a full-blown trade war – instead offering concessions in the hope of winning more favourable treatment from the White House.
As tariffs push up some prices, and amid a resurgence in the cost of food, the OECD expressed concern that the slowdown in inflation, after the spike that followed Russia’s invasion of Ukraine in 2022, had come to a halt in some countries.
It also highlighted “significant risks” to the global economic outlook in the coming months.
“Further increases in bilateral tariff rates, a resurgence of inflationary pressures, increased concern about fiscal risks, or substantial risk repricing in financial markets could all lower economic growth relative to the baseline,” the report said.
The body also highlighted the danger of “high and volatile crypto-asset valuations”, given how closely these are intertwined with the global financial system.