OECD Economic Outlook – September 2025
Finding the Right Balance in Uncertain Times
Introduction
Global growth proved more resilient than expected in the first half of 2025, especially in many emerging markets but also the United States. Industrial production and trade were buoyed by front-loading ahead of higher tariffs. US tariffs on imports from almost all countries have increased since May, reaching an estimated effective rate of 19.5% at the end of August, the highest since the mid-1930s. While the full impact of tariff increases is still unfolding, early signs of effects are visible in consumer behaviour, labour markets and prices. Labour markets are softening, with higher unemployment and fewer job openings in some economies, while disinflation has stalled in many economies as food prices rose and services inflation remained persistent. Looking ahead, downside risks loom large: further tariff hikes, increased concerns about fiscal risks, renewed inflation pressures could weigh on growth. Financial market repricing, including of volatile crypto-assets could pose additional financial stability concerns. On the upside, easing trade restrictions or faster advances in AI could support stronger outcomes.
Key figures
Global growth remains resilient
Global GDP growth is projected to slow from 3.3% in 2024 to 3.2% in 2025 and 2.9% in 2026, as higher tariffs and ongoing policy uncertainty slow down investment and trade.
In the United States, growth is projected to fall sharply from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026 owing to higher tariff rates, moderating net immigration and reductions in the federal government workforce. China also sees a notable growth deceleration, from 4.9% in 2025 to 4.4% in 2026, as front-loading unwinds, higher tariffs take effect and fiscal support fades; while the euro area GDP growth experiences a smaller but steady slowdown, from 1.2% in 2025 to 1.0% in 2026 with increased trade frictions and geopolitical uncertainty somewhat offset by stronger public investment and easier credit conditions.
Inflation is set to ease but risks linger
Inflation in most G20 economies is projected to fall as economic growth and labour markets continue to soften. Headline inflation is expected to decline from 3.4% in 2025 to 2.9% in 2026, while core inflation in advanced G20 economies remains broadly stable, easing only slightly from 2.6% to 2.5%.
However, inflationary pressures could resurface. The pace of disinflation has slowed in some economies, with goods prices edging higher and services inflation remaining stubborn.
The full effects of tariff increases have yet to be felt
The full impact of tariff increases is still unfolding with many measures being introduced gradually and firms initially absorbing some of the costs through their margins. The effects of higher tariffs, however, are becoming increasingly evident.
