OECD Economic Outlook – June 2025
Tackling Uncertainty, Reviving Growth
Introduction
The global outlook is becoming increasingly challenging. Substantial increases in trade barriers, tighter financial conditions, weakened business and consumer confidence, and elevated policy uncertainty all pose significant risks to growth. If these trends continue, they could substantially dampen economic prospects. Rising trade costs—particularly in countries implementing new tariffs—are likely to fuel inflation, although this may be partly offset by softer commodity prices. Risks to the outlook remain substantial. Key concerns include further escalations or sudden shifts in trade policies, more cautious behaviour from consumers and businesses, and continued repricing of risk in financial markets. Inflation may also stay elevated for longer than anticipated, especially if inflation expectations continue to rise. On the upside, an early reversal of recent trade barriers could boost economic growth and help ease inflationary pressures.
Key figures
Global growth is expected to slow
Global GDP growth is projected to slow from 3.3% in 2024 to 2.9% this year and next year (based on the assumption that tariff rates as of mid-May are sustained). The slowdown is concentrated in the United States, Canada, Mexico and China, with other economies expected to see smaller downward adjustments. Growth through 2025 is expected to be especially weak, with global output rising by just 2.6% over the year to the fourth quarter, and by only 1.1% in the United States.
Inflation may prove more persistent than expected
Inflation in the OECD is now projected to be slightly higher through 2026 than previously anticipated. OECD-wide inflation is projected to reach 4.2% in 2025, up from 3.7% in the December projections, and 3.2% in 2026, compared to a previous estimate of 2.9%.
Investment has been weak
Weak investment has weighed on potential output growth since the global financial crisis (GFC), despite historically low financing costs and strong corporate profitability. The slowdown in capital accumulation largely reflects the lasting impact of two major shocks – the GFC and the COVID-19 pandemic. Housing and public investment have also slowed in many countries, contributing to a deteriorating housing affordability and public infrastructure.
