OECD Expects Stable Growth of the Global Economy in 2025

The global economy is expected to grow this year by slightly more than three percent as investments in artificial intelligence currently support activity in the U.S., while fiscal support alleviates the slowdown in China, the Organization for Economic Cooperation and Development (OECD) announced on Tuesday.

Global economic activity is projected to increase by 3.2 percent this year, roughly the same as last year, according to the latest preliminary forecasts from the OECD.

June forecasts indicated a growth rate of 2.9 percent.

The OECD continues to expect that growth rate for the next year.

The final ‘cost’ of raised U.S. tariffs has yet to be determined, they noted, adding that companies have so far absorbed a larger part of the shock through lower margins and stockpiling.

The effective U.S. tariff rate on imported goods rose to an estimated 19.5 percent by the end of August, the highest level since 1933 and the most challenging phase of the Great Depression.

Slowdown in the U.S.

The OECD predicts that the growth of the U.S. economy will slow to 1.8 percent in 2025, a full percentage point weaker than last year.

In June, they had forecast a growth rate of 1.6 percent.

In the next year, the world’s largest economy will further slow down, with an expected growth rate of 1.5 percent, they calculated, confirming the June forecast.

The boom in artificial intelligence investments, fiscal support, and lower interest rates should mitigate the impact of higher tariffs and reduced net immigration, as well as job losses at the federal level, the OECD stated.

Consumption Boost for Germany

In the Eurozone, however, trade and geopolitical tensions will negate the favorable impact of lower interest rates, the OECD estimates.

The economy using the common currency euro is expected to grow by 1.2 percent this year, according to their new calculations, which is 0.2 percentage points stronger than indicated in the June report.

In 2026, growth is expected to slightly slow to one percent. The forecast from early summer had predicted a growth rate of 1.2 percent.

Increased public spending will be a boost for the economy in Germany, while belt-tightening will hinder activity in France and Italy, they note.

The strongest growth among the four leading Eurozone economies is expected in Spain, at 2.6 percent this year and 2.0 percent in 2026.

‘Sixes’ in India

The highest growth rates are expected to be recorded by India this year and next, at 6.7 and 6.2 percent, respectively.

Following are Indonesia and China, with a projected growth rate of 4.9 percent this year. In 2026, China is expected to slightly slow to 4.5 percent, while Indonesia is expected to maintain this year’s growth rate.

Fiscal support will alleviate the slowdown in activity in the Chinese economy this year, but its impact is expected to weaken in 2026, along with the additional burden of higher tariffs, the OECD estimates.

The Indonesian economy will be further boosted by additional easing of monetary policy and strong government investments, according to them.

The Russian economy is expected to grow by one percent this year and by 0.7 percent in 2026.