The global economy has proven to be more resilient than anticipated, with an artificial intelligence boom supporting the United States and fiscal stimulus bolstering China, although the full impact of sweeping U.S. tariffs has yet to emerge, according to the Organization for Economic Cooperation and Development.
In the OECD’s September report, the group flagged that while the elevated levies have been phased in over time and companies have initially absorbed some of the extra costs, the effect of the duties is becoming more "visible in spending choices, labor markets and consumer prices."
Meanwhile, signs of softening employment growth are beginning to appear, with jobless rates moving up and open positions declining, particularly in the U.S., the OECD said. A resurgence of goods and services inflation has been generally persistent as well, it added.
Financial conditions have also eased in recent months, driven by "buoyant" asset prices, improving credit provision and low corporate bond spreads. However, the OECD argued that asset values now "appear stretched" and there is "growing concern about future fiscal risks."
Partially weighed down by higher tariffs and policy uncertainty dampening investment and trade, global gross domestic product growth is now seen sliding to 3.2% in 2025 and 2.9% next year, the OECD said. In 2024, worldwide GDP stood at 3.3%.
"Significant risks to the economic outlook remain. 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 OECD warned.
Still, faster development and adoption of AI was highlighted as a possible source of stronger growth.
Annual GDP in the U.S. is projected to fall to 1.8% in 2025, before slowing further to 1.5% in 2026 -- both below expansion of 2.8% notched last year. In China, growth is expected to come in at 4.9% and 4.4% in the next two years, respectively, as front-loading to evade U.S. tariffs unwinds and fiscal support wanes.
Source :
https://www.investing.com/news/economy-news/full-impact-of-sweeping-us-tariffs-has-yet-to-emerge-oecd-warns-4250955
