Global Economy Shows Resilience with 3.2% Growth Forecast Despite Trump's Trade Policies

The OECD expects China, the world's No. 2 economy, to grow 5 per cent this year.

Washington:

The global economy has demonstrated remarkable resilience despite President Donald Trump's trade policies, according to the Organisation for Economic Cooperation and Development's Tuesday report, which upgraded its projections for worldwide and US economic growth this year.

The 38-nation OECD now forecasts 3.2 per cent global economic growth for 2025, slightly below 2024's 3.3 per cent but significantly better than the 2.9 per cent predicted in June. The organization, which conducts economic research and advocates for international trade and prosperity, anticipates global growth will decelerate to 2.9 per cent next year.

The OECD has also revised its US growth forecast upward to 2 per cent for this year, compared to the 1.6 per cent projected in June. Nevertheless, even with this improvement, the American economy - the world's largest - would experience considerably slower growth than in 2024 (2.8%).

Since his January return to the White House, Trump has transformed US trade policy by implementing import taxes to establish protectionist barriers around the previously open American economy.

These trade restrictions were widely expected to hamper growth and increase costs. However, the tariffs imposed were lower than those threatened earlier in the spring. Many businesses avoided these levies by importing foreign products into the United States before implementation. Additionally, both US and global economies are benefiting from substantial investments in artificial intelligence.

"The global economy has been resilient this year, despite concerns about a sharper slowdown in the wake of higher trade barriers and significant policy uncertainty," OECD Secretary-General Mathias Cormann wrote in his commentary accompanying the forecasts. Nevertheless, he added: "We expect higher tariffs to gradually feed through to higher prices, reducing growth in household consumption and business investment.''

The OECD projects China, the world's second-largest economy, will grow 5 per cent this year, matching its 2024 performance. The organization forecasts that the 20 economies sharing the euro currency will collectively expand by 1.3 per cent in 2025, unimpressive but improved from 0.8 per cent in 2024.

India, which has surpassed China as the world's fastest-growing major economy, is expected to achieve 6.7% growth this year, up from 6.5 per cent in 2024.