Trade war cuts global economic growth outlook, warns OECD
AFP | Paris
The OECD slashed its annual global growth forecast yesterday, warning that US President Donald Trump's tariffs blitz would stifle the world economy -- hitting the United States especially hard.
After 3.3% growth last year, the world economy is now expected to expand by a 'modest' 2.9% in 2025 and 2026, the Paris-based Organisation for Economic Co-operation and Development said.
In its previous report in March, the OECD had forecast growth of 3.1% for 2025 and 3.0% for 2026.
Since then, Trump has launched a wave of tariffs that has rattled financial markets.
'The global outlook is becoming increasingly challenging,' said the OECD, an economic policy group of 38 mostly wealthy countries.
It said 'substantial increases' in trade barriers, tighter financial conditions, weaker business and consumer confidence, and heightened policy uncertainty will all have 'marked adverse effects on growth' if they persist.
The OECD downgraded its 2025 growth forecast for the United States from 2.2% to 1.6%.
The world's biggest economy is expected to slow further next year to 1.5%.
Trump, who has insisted that the tariffs would spark a manufacturing revival and restore a US economic 'Golden Age', posted on his Truth Social platform before the OECD report's publication: 'Because of Tariffs, our Economy is BOOMING!'
The OECD holds a ministerial meeting in Paris on Tuesday and Wednesday.
US and EU trade negotiators are expected to hold talks on the sidelines of the gathering after Trump threatened to hit the European Union with 50-percent tariffs.
Rising risks
The OECD slightly reduced its growth forecast for China -- which was hit with triple-digit US tariffs that have been temporarily lowered -- from 4.8 to 4.7% this year.
Another country with a sizeable downgrade is Japan. The OECD cut the country's growth forecast from 1.1% to 0.7%.
The outlook for the eurozone economy, however, remains intact at one-percent growth.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Tribune
7 hours ago
- Daily Tribune
Chad Suspends U.S. Visas After Trump Revives Travel Ban on 12 Countries
Chad's President Mahamat Idriss Déby announced on Thursday that his government will suspend the issuance of visas to U.S. citizens. The decision comes a day after U.S. President Donald Trump reintroduced a travel ban targeting 12 countries, including Chad, citing national security concerns. President Trump's policy—which echoes a controversial hallmark of his first term—targets countries he claims have 'deficient' screening and vetting procedures or have historically failed to repatriate their citizens who overstay U.S. visas. The list includes Afghanistan, Myanmar, Chad, the Republic of Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan, and Yemen. Additional travel restrictions will be imposed on visitors from seven other nations. Chad's President, in a strongly worded statement posted on Facebook, declared the suspension of U.S. visa processing in Chad, framing it as an issue of national dignity and sovereignty. 'Chad has no planes to offer, no billions of dollars to give—but Chad has his dignity and pride,' Déby wrote, making a pointed reference to a $400 million luxury aircraft gifted by Qatar to his administration. The announcement has added to a wave of criticism from African nations affected by the ban. In the Republic of Congo, government spokesperson Thierry Moungalla called the U.S. decision a 'mistake,' attributing it to a misunderstanding involving an armed attack in the United States. He asserted that Congo is neither a terrorist hub nor associated with any extremist activities, and expects diplomatic clarification soon. Sierra Leone, which faces heightened travel restrictions rather than a full ban, also responded diplomatically. Information Minister Chernor Bah affirmed the country's commitment to working with U.S. authorities to address concerns and ensure progress on bilateral relations. The renewed travel ban is expected to take effect Monday at 12:01 a.m. Washington time. Analysts predict this move will further strain U.S. relations with several African and Middle Eastern nations, especially as they voice concerns about fairness, transparency, and the implications for diplomacy and migration.
Daily Tribune
7 hours ago
- Daily Tribune
Trump, Xi hold trade call
US President Donald Trump held a long-awaited phone call with Chinese President Xi Jinping yesterday as the leaders of the world's two biggest economies tried to avoid an allout trade war. Trump said that the call reached a 'very positive conclusion' and that they agreed to meet in person -- but Beijing issued a more muted readout saying that Xi spoke of a need to 'correct the course' of ties. The call -- the first to be publicly announced since Trump returned to power in January -- comes after Beijing and Washington had accused each other of jeopardizing a trade war truce agreed last month in Geneva. 'The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both Countries,' Trump said on Truth Social, adding that US and Chinese trade teams would hold a new meeting 'shortly.' 'President Xi graciously invited the First Lady and me to visit China, and I reciprocated. As Presidents of two Great Nations, this is something that we both look forward to doing,' Trump added. Trump said they would announce the time and place of the 'soon to be meeting' later. The two leaders did not, however, discuss Russia's invasion of Ukraine, Trump said, despite long-standing US hopes that Beijing could exert influence on Moscow to end the war. 'The conversation was focused almost entirely on TRADE,' said Trump, adding that they hoped to have resolved issues over crucial rare earth minerals used in tech products. Relations between superpower rivals Beijing and Washington have been fraught ever since Trump in April introduced sweeping worldwide tariffs that targeted China most heavily of all.
Daily Tribune
8 hours ago
- Daily Tribune
Stocks slide as Trump, Xi speak amid trade tensions
Stocks markets slid yesterday after US President Donald Trump and Chinese leader Xi Jinping spoke amid their trade war, while the European Central Bank signalled an end to its rate-cut cycle. Wall Street's major indices rose modestly as trading got underway, but had trouble holding onto the gains and soon slid into the red. Chinese state media reported that Xi had held a widely anticipated call with Trump, with investors hoping it could ease trade tensions -- but no details were provided. The call follows officials from the world's two biggest economies accusing each other of jeopardising a trade war truce agreed last month in Geneva. 'The stock market has traded more timidly of late... mindful that there are a number of loose ends out there on the tariff front, not the least of which is the direction the US-China trade relationship is headed,' said analyst Patrick O'Hare. After his return to the White House Trump launched a tariffs blitz, introducing a 10 percent minimum tariff and higher rates on many countries, with China subject to the highest rates. Some of the higher rates have been suspended as negotiations are underway. European stock markets were also in the red even though the ECB cut its key deposit rate a quarter point to two percent, as expected. It was its eighth reduction since June last year when it began lowering borrowing costs. But ECB President Christine Lagarde stated the central bank is 'getting to the end' of the rate cutting cycle, as inflation has largely dropped to its two percent target in the 20-nation currency bloc. That sent the euro surging against the dollar and European stocks gave up gains. The ECB's series of cuts stands in contrast to the US Federal Reserve, which has kept rates on hold recently amid fears that Trump's levies could stoke inflation in the world's top economy. Investors are now looking to the release on Friday of US non-farm payrolls data, which the Fed uses to help shape monetary policy. Other data released this week has been mixed. April jobs openings data beat expectations, but according to payroll firm ADP private-sector jobs rose by only 37,000 last month. This was a sharp slowdown from April's 60,000 and less than a third of the amount forecast in a Bloomberg survey. Another survey showed activity in the US services sector contracted in May for the first time since June last year.
