Global economic growth is projected to slow to 2.9 per cent in both 2025 and 2026, according to the Organisation for Economic Co-operation and Development. The OECD released its latest forecast this week, citing rising trade tensions and weakening investment as key factors behind the downgrade. The new figures mark a drop from previous estimates of 3.1 per cent growth in 2025. The OECD identified new tariffs introduced by the United States, especially on steel, aluminium and electric vehicles, as a significant drag on trade. Slowing demand in major economies is compounding the effect of tighter monetary policy. The report noted that global trade volumes remain subdued, with firms delaying investment decisions amid ongoing uncertainty. The United States is expected to grow by 1.8 per cent in 2025, down from earlier projections. The OECD cited high interest rates and reduced export competitiveness as contributing factors. The eurozone is forecast to expand by 1.4 per cent. The European Central Bank is widely expected to begin cutting rates this month following signs that inflation is easing across the bloc. In the United Kingdom, growth is projected at 1.2 per cent. Weak productivity, sluggish wage growth and high borrowing costs remain persistent obstacles to recovery. China’s growth outlook was also lowered. The economy is forecast to grow by 4.6 per cent in 2025, amid declining factory output and falling export orders. India remains a bright spot, with GDP expected to rise by 6.5 per cent. Domestic demand and public investment are keeping momentum strong despite external headwinds.

The OECD said inflation is easing but warned that interest rates will likely remain above pre-pandemic levels. This will continue to limit public spending and raise borrowing costs for developing economies.

Labour markets in advanced economies are stable, though real wages are rising slowly. The organisation called for targeted fiscal support and structural reform to bolster long-term growth....