OECD slashes US, global growth forecasts on tariff impacts

The Organisation for Economic Co-operation and Development slashed its U.S. growth forecasts Tuesday and took global expectations down as well, citing the pervasive impacts of tariffs.Why it matters: If the group's last outlook three months ago was cautious, then Tuesday's forecast was downright gloomy. What they're saying: "Substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth," the OECD's report said."If these trends continue, they could substantially dampen economic prospects."By the numbers: The group lowered its global GDP growth forecast to 2.9% for 2025 from the 3.1% it projected in March, and to 2.9% from 3% for 2026.For the U.S., it now forecasts growth of 1.6% this year and 1.5% next year, from 2.2% and 1.6% previously. Between the lines: Among other risks, the group also flagged a heightened risk of persistent inflation.OECD-wide inflation for the group's 38 member countries is now expected to be 4.2% this year, a half-point higher than the outlook just six months ago. Yes, but: The forecast hinges on perhaps the most uncertain question in global politics today — whether tariffs stick around, and at their current rates.[A]n early reversal of recent trade barriers could boost economic growth and help ease inflationary pressures," the report notes.Of note: Despite the dour overall mood, the new OECD report still projects every member country's economy growing at least slightly this year, except for Austria — and all, including Austria, growing in 2026.

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