US Economy to Grow by Merely 1.6 Percent, Says OECD

The global economy is heading for its weakest period of growth since the COVID-19 pandemic, the Organisation for Economic Co-operation and Development (OECD) warned on Tuesday, slashing its forecasts for both the U.S. and the world economy. The agency pointed to the damaging impact of rising tariffs, declining business and consumer confidence, and high inflation as key factors behind its gloomy projection.

Trade Tensions and Uncertainty Drag Down Growth

In its latest report, the OECD highlighted that "substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth."

The report cautioned that if these trends persist, "they could substantially dampen economic prospects."

US Economy Expected to Grow Just by 1.6 Percent

The OECD downgraded global GDP growth forecasts to 2.9% for 2025, down from 3.1% just three months ago. The outlook for 2026 was also trimmed slightly, from 3% to 2.9%.

The U.S. economy, which had been expected to grow 2.2% this year, is now forecast to expand by just 1.6%. Next year's projection was cut to 1.5%, down from 1.6%.

Rising Inflation Still a Concern

In addition to slower growth, the OECD also warned of persistent inflation pressures. For its 38 member countries, inflation is now expected to average 4.2% in 2025 — half a percentage point higher than the agency’s forecast six months ago.

A Path Forward: Lifting Trade Barriers

The OECD report noted that trade policy will be a decisive factor in shaping the economic outlook moving forward. "[A]n early reversal of recent trade barriers could boost economic growth and help ease inflationary pressures," the report stated.

With major economies still grappling with the aftershocks of the pandemic and geopolitical tensions adding to uncertainty, the OECD’s latest outlook paints a sobering picture — one that underscores the importance of coordinated, stabilizing policy action.