OECD Economic Outlook, Volume 2025 Issue 2

The global economy has proved more resilient than expected this year, but underlying fragilities remain. Supportive macroeconomic policies, improved financial conditions and rising AI-enabling investment and trade, have helped underpin demand, cushioning the headwinds from elevated policy uncertainty and rising barriers to trade. Nonetheless, global GDP growth is projected to slow in 2026, as front-loading activity further unwinds and the impacts of higher effective tariff rates are more fully felt, before picking up modestly in 2027. Growth could be weaker if there are additional increases in trade barriers or if there are upside inflation surprises. A repricing of stretched asset valuations could also weaken the outlook, especially if it is amplified by forced asset sales by highly leveraged non-bank financial intermediaries. In contrast, a reversal of the recent increase in trade barriers or a faster emergence of the productivity benefits from new technologies could have positive impacts on global growth. The key policy priorities are to ensure a lasting decline in policy uncertainty, trade tensions and inflation, establish a credible fiscal path to debt sustainability, effectively monitor and supervise emerging financial stability risks and implement ambitious reforms to strengthen economic growth prospects.