Global economic “Bang” Still Expected Despite Short-Term Gains,OECD Warns
Paris – The global economy is still on track for a meaningful downturn stemming from Donald Trump‘s customs duties,despite better-than-expected growth this year,according to a new report released Tuesday by the Association for Economic Cooperation and Advancement (OECD). The report, titled “Finding The Right Balance in Uncertain Times,” indicates the full impact of these tariffs has yet to be realized.
The OECD has revised its growth estimates upward for the world economy and many individual countries, attributing the increase to companies accelerating investments – known as “front-loading” – in anticipation of future trade barriers. Investments in artificial intelligence have also contributed to the positive revision.
However, the organization forecasts global growth will decelerate to 2.9% in 2026, down from 3.2% in 2024. the United States is expected to see a slowdown to 1.5% growth from 1.8%, as tariff increases take hold and uncertainty mounts.
The total effective US tariff rate reached 19.5% at the end of August – the highest level since 1933 – and its effects are increasingly visible in monetary policy, labor markets, and consumer prices. while many companies have absorbed some tariff costs by reducing profit margins, the OECD warns the full economic consequences are still to come.
“There is a significant bang for the US economy, and because the US economy is so significant to the rest of the world, this will have implications for many countries,” said OECD chief economist Alvaro Pereira.
The OECD acknowledges “considerable” uncertainty surrounding its forecasts, including the potential for further tariff increases or accelerating price growth.
