OECD Predicts Strong Global Growth Despite Tariff Shocks
The OECD reports that global growth is resilient despite U.S. tariff impacts. AI investments and fiscal support boost the U.S., while China's growth slows. Predicted growth rates for 2025 have been upgraded. Central banks may cut rates as inflation eases, although Japan plans a rate hike.
The OECD forecasts that global growth will hold stronger than expected despite the impacts of U.S. tariffs, largely due to AI investments boosting U.S. activity and fiscal measures cushioning China's slowdown. However, the full effect of these tariffs has not yet been felt, with firms currently absorbing much of the shock via narrower margins and inventory buffers.
In its latest report, the OECD upgraded its 2025 global growth forecast to 3.2% from 3.3% last year, a slight decline but an improvement from June's projections. The U.S. economic growth is expected to decelerate to 1.8% in 2025, aided by an AI investment boom and federal interventions offsetting tariff impacts and other domestic economic challenges.
Most central banks are expected to lower borrowing costs amidst a slowing global economy unless inflation pressures arise. While the U.S. Federal Reserve might further cut rates, Japan stands out by planning to raise rates as it steps away from an ultra-loose monetary policy.
(With inputs from agencies.)
Google News