OECD Upgrades Global and U.S. Economic Growth Forecasts as Resilience Surprises in 2025

The Organisation for Economic Co-operation and Development (OECD) has raised its global economic growth forecast for 2025, citing stronger-than-expected performance across many major economies, particularly in emerging markets. The OECD now projects global growth of 3.2% this year, a notable increase from the 2.9% expansion predicted in June. The growth forecast for 2026 remains unchanged at 2.9%, signaling a potential slowdown compared to the 3.3% expansion recorded in 2024.

For the United States, the OECD has revised its 2025 growth forecast to 1.8%, up from the previous estimate of 1.6%. While this represents a slowdown from 2024’s 2.8% growth, it still reflects stronger momentum than anticipated. The OECD also forecasts a 1.5% U.S. growth rate in 2026.

Emerging Markets Drive Global Resilience

One of the key drivers of this more optimistic outlook has been the unexpected resilience in many emerging-market economies. Brazil, Indonesia, and India are highlighted as specific contributors to global growth, with industrial production and trade benefitting from strategic front-loading of economic activity ahead of higher tariffs.

AI-driven investment in the United States has also played a role in the country’s stronger-than-expected performance, while China’s fiscal support helped cushion the impact of trade disruptions and a soft property market. The OECD’s Alvaro Pereira noted that emerging markets, in particular, played a crucial role in exceeding growth expectations, and much of the global economy has outperformed expectations during the first half of 2025.

However, Pereira also emphasized that the OECD does not expect the same level of growth to continue through the latter half of the year, particularly after the early-year boost caused by front-loading. This is expected to lead to a general slowdown across most of the G20 countries.

Tariff Risks and Policy Uncertainty Persist

Despite the positive growth revision, the OECD warned of continued risks to the global economic outlook, particularly stemming from the ongoing impacts of trade policies and tariffs. The U.S. has implemented sweeping tariffs on goods entering the country, and many countries face up to 50% tariff rates on their exports, with some still negotiating trade frameworks.

The OECD highlighted that the U.S. tariff rates had risen significantly, reaching the highest levels since 1933 by the end of August 2025. These tariff hikes, still being phased in, are expected to have long-term effects, impacting consumer prices, spending habits, and labor markets worldwide. According to the report, the full impact of these tariff increases has not yet been fully realized, but early signs show that businesses are absorbing some of the cost increases through margins, while consumers are beginning to feel the pinch in the form of higher prices.

Pereira also noted that inflationary pressures are building in many countries due to these tariff hikes, adding further complexity to the global economic picture. The OECD’s revised inflation forecast for G20 countries in 2025 is 3.4%, slightly lower than the previous projection of 3.6%. For the U.S., inflation expectations were revised down sharply to 2.7% in 2025, compared to a previous forecast of 3.2%.

Risks to Inflation and Financial Stability

The OECD also flagged several other key risks, including potential further tariff increases and a resurgence in inflationary pressures in the future. The fiscal situation of many countries remains precarious, and growing concerns about the stability of financial markets could prompt significant shifts in asset prices. Additionally, the volatile valuations of crypto-assets have raised financial stability risks, particularly as the traditional financial system becomes more intertwined with digital assets.

However, the OECD also pointed out some upside risks that could bolster the global economy. These include the potential for reductions in trade restrictions or faster adoption of artificial intelligence technologies, which could provide a much-needed boost to global growth prospects.

A Complex Road Ahead

While the OECD’s upgraded forecast reflects more resilience than previously expected, the road ahead remains complex. High tariffs, trade uncertainties, and inflationary pressures continue to create challenges for both developed and emerging economies. At the same time, the continued progress in AI investment, emerging markets, and fiscal policy support offers hope for more balanced and sustained global growth in the coming years.

As the global economy navigates these tumultuous waters, policymakers will need to strike a delicate balance between encouraging growth and managing the risks posed by rising tariffs, inflation, and financial instability. The OECD’s report underscores the importance of continued flexibility and adaptation in addressing these challenges, particularly as we look toward the latter part of 2025 and beyond. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.