The Organisation for Economic Co-operation and Development (OECD) has slightly upgraded its forecast for global economic growth in 2025, suggesting the world economy may better withstand potential trade disruptions than previously feared. However, the Paris-based institution cautioned that downside risks remain significant. n nIn its updated global economic outlook, the OECD highlighted that anticipated increases in tariffs on goods production and trade have played a major role in shaping current economic dynamics. The new projection estimates global growth at 3.2% for 2025, up from 2.9% forecast in June during the peak of trade tensions. Yet, growth is expected to stabilize at 2.9% in 2026, showing little improvement. n nThis adjustment brings the organization’s current forecast closer to its December prediction—issued before Donald Trump’s return to the White House—when it projected 3.3% growth for the year. However, the 2026 outlook remains 0.4 percentage points lower than that earlier estimate. n nThe U.S. economy is expected to face headwinds this year due to the ongoing trade policy shifts initiated by the Trump administration. Growth is projected to slow to 1.8% this year and further decline to 1.5% next year, down from 2.8% in the previous year. n nAlvaro Pereira, the OECD’s chief economist, noted that stricter immigration policies, particularly affecting the technology sector workforce, could constrain labor supply. He emphasized that reduced labor force expansion would clearly impact GDP, describing immigration as a key advantage for the American economy. Pereira is set to leave the organization to assume the governorship of Portugal’s central bank. n nFor the eurozone, growth is expected to rise modestly to 1.4% in 2025, up from 1.2% projected in June, but dip slightly to 1.0% in 2026. The organization urged fiscal prudence, especially in France, warning that the country must exercise “extreme caution” in managing public finances. n nPereira pointed to countries like Italy and Portugal as examples of successful fiscal consolidation, contrasting them with France’s rising debt levels. He stressed the importance of learning from past experiences to avoid financial instability. n nSince taking office in January, President Trump has imposed additional tariffs on most U.S. trading partners, raising the effective import tariff rate by 19.5%—the highest level since 1933, according to the OECD. Despite this, early 2025 saw stronger-than-expected industrial output in most advanced economies during the first half of the year, contributing to cautious optimism. n nThe OECD explained that the full impact of higher tariffs has not yet materialized, as many changes were implemented gradually and firms initially absorbed cost increases within profit margins. However, signs of slowing production have emerged since August, particularly in South Korea, Germany, and Brazil. n nConsumer demand has also weakened across major economies, including the United States, the euro area, and China. The OECD official noted that healthy economic performance typically involves growth near 4%, indicating that current conditions still fall short of robust expansion. n nInflation is expected to edge upward, especially in the U.S., but also in other regions such as Japan and South Africa, driven by rising food prices. Additional risks include potential further tariff hikes and growing concerns over financial stability, fueled by high debt levels worldwide and pressure on interest rates. n— news from aljazeera.net n
— News Original —nOrganisation for Economic Co-operation and Development raises its expectations for global economic growthn nThe Organisation for Economic Co-operation and Development – in the economic field slightly – raised its expectations for global growth during 2025, pointing out that it may be able to overcome the consequences of potential tariffs better, but warned at the same time of potential negative repercussions. n nThe organization, headquartered in Paris – in a report showing its updated global economic expectations – indicated that “the consequences of expecting higher tariffs on the production and trade of goods played a major role” in the global economy. n nThese expectations showed slight optimism compared to those published by the organization in June, at the height of the tariff war, as it now estimated that global growth would reach 3.2% compared to 2.9% at that time, but it may remain stable at 2.9% in 2026. n nThus, the international organization approaches its growth expectations issued last December, before US President Donald Trump arrived at the White House, when it expected global GDP growth of 3.3% for this year, but its expectations for 2026 are still much lower, by 0.4 percentage points, with 2.9%. n nAs for the US economy, it is expected to pay the price this year of the tariff war initiated by Trump, with growth slowing to 1.8% and then 1.5% next year, compared to GDP growth of 2.8% last year. n nWhile Trump is tightening his policy on immigration, particularly through restrictions on workers in the technology sector, AFP quoted the institution’s chief economist Alvaro Pereira as saying, “There is less growth in the workforce, which will have a clear impact on GDP,” considering immigration an “essential advantage for the US economy.” n nAs for the euro zone, growth is expected to rise slightly by about 0.2 percentage points in 2025 to 1.4% compared to the organization’s June estimates of 1.2%, and decrease by about 0.2 percentage points in 2026 to 1%. n nAmong the countries threatened in the region, the organization’s chief economist said France in particular must “exercise extreme caution in its financial affairs in the coming years.” n nHe added, “We must learn from what happened in countries such as Italy, Portugal and others. These countries returned to fiscal discipline, while France continues to increase its debt.” n nFactors of optimism n nSince assuming office in January, Trump has imposed additional tariffs on most of America’s trading partners, leading to an increase in the actual tariff rate on US imports by 19.5%, the highest since 1933, according to the Organisation for Economic Co-operation and Development. n nWhat raised factors of optimism for this year was the growth of industrial production in the first six months of the year at a rate greater than its average expected growth in 2024 in most advanced economies, according to the same source. n nThe organization added that “the consequences of increasing tariffs have not yet fully appeared because the implementation of many changes was gradual and companies initially collected some of these increases from their profit margins.” n nHowever, the organization warned of emerging “signs of slowdown” in production growth since August, particularly in South Korea, Germany and Brazil. n nRegarding consumption, the Organisation for Economic Co-operation and Development noted a slowdown in the United States, the euro zone and China. n nThe organization’s chief economist pointed out that “in general, when the economy is in a very good position, the growth rate is about 4%, so we are far from that.” n nPereira, who was appointed governor of the Bank of Portugal during the summer and will soon leave the organization, added, “We expect a slight increase in inflation, especially in the United States, but not only there, for example through rising food prices in countries such as Japan and South Africa.” n nAmong other risk factors, the organization points to the possibility of increasing tariffs and growing concerns about financial risks, against the backdrop of rising debt in most parts of the world and pressure on interest rates.