Global Economy Braces for Tariff Shock Amid Growth Adjustments
The OECD's latest Economic Outlook highlights a resilient global economy, buffered by AI investments, despite looming U.S. tariff shocks. Forecasts for 2025 have strengthened, though higher tariffs pose imminent risks. Monetary policies are expected to ease to accommodate growth fluctuations, while trade barriers and fiscal supports play crucial roles.
The global economy is demonstrating resilience, though the full effect of the U.S. import tariffs has yet to be experienced, according to the OECD's recent Economic Outlook Interim Report. While AI investments are currently bolstering U.S. activity, China's economic slowdown is cushioned by fiscal support.
Despite the threat of higher tariffs significantly impacting investment and trade growth, the OECD's forecasters have updated their 2025 global economic growth prediction to a moderate decline of 3.2%, a slight dip from 3.3% last year. Expectations for 2026 remain at 2.9%, though uncertainties linger.
The OECD anticipates key central banks maintaining loose monetary policies due to easing inflation pressures. The U.S. Fed may further reduce rates amidst a weakening labor market unless inflation broadens due to tariffs. Meanwhile, Australia's, Canada's, and Britain's rates could witness gradual reductions.
(With inputs from agencies.)
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