World economy to accelerate in 2025, but recovery threatened by higher tariffs, OECD says
Subscribe to enjoy similar stories. The global economy is set to grow at slightly a faster pace next year as inflation continues to cool, but could falter if tariffs rise and governments fail to narrow wide budget deficits, the Organization for Economic Cooperation and Development said Wednesday. In a quarterly report, the Paris-based research body said it now expects the world economy to grow by 3.3% next year, a pickup from the 3.2% rate of expansion it estimates for this year.
It had previously expected the global growth rate to be unchanged in 2025, but now expects the U.S. economy to grow by 2.4%, having previously projected an expansion of 1.6%. “Growth continues to be resilient," said Alvaro Pereira, the OECD’s chief economist, in an interview with The Wall Street Journal.
“We see U.S. growth being very robust." However, those forecasts assume no changes in trade policies, and that appears unlikely given that U.S. President-elect Donald Trump has said he will impose higher tariffs on imports from a wide range of countries.
Pereira warned that there are increasing risks to the growth outlook from trade tensions and protectionism, with higher tariffs likely to weaken growth and push consumer prices higher. Another threat to the recovery from the Covid-19 pandemic and the inflation surge is wide budget deficits in a number of countries, including the U.S. and France.
Yields on U.S. government bonds rose in the run-up to and in the immediate aftermath of the country’s presidential election as investors worried about the prospect of bigger budget imbalances in the second Donald Trump administration. Although yields have fallen slightly since the appointment of hedge-fund manager Scott Bessent to lead the Treasury
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