The global economy is facing considerable risk, and the Organization for Economic Co-operation and Development (OECD) is highlighting the urgent need for “stronger business development” to counter the negative impacts of the trade war. The OECD has significantly lowered its global economic growth projections, now anticipating a decline from 3.3% in 2024 to 2.9% in both 2025 and 2026, underscoring the severity of the challenge.
The OECD’s latest outlook report states unequivocally that “weakened economic prospects will be felt around the world, with almost no exception.” It predicts that “lower growth and less trade will hit incomes and slow job growth,” signaling a broad negative impact on livelihoods globally. The United States, Canada, Mexico, and China are specifically identified as major contributors to this anticipated global economic decline.
Adding to the concerns, the OECD warns that “protectionism” will lead to increased inflation, causing costs for goods and services to rise. This inflationary pressure, combined with already high debt levels, poses a severe risk for developing nations, which may struggle with refinancing needs and increased borrowing costs, thus hindering business development.
In response to this grim outlook, the OECD advises central banks to “remain vigilant” regarding inflation, even if immediate interest rate hikes are not expected. Crucially, the report’s final suggestion is to “increase investments that will lead to stronger business development,” acknowledging that governments with existing debt may find it more difficult to finance such crucial projects that are essential for economic vitality.