The Organisation for Economic Co-operation and Development lowered its outlook for global economic growth this year and next. In its most recent Economic Outlook, the OECD says trade barriers and falling consumer and business confidence might challenge growth this year. The downwardly revised growth projections come as little surprise given escalating trade tensions, particularly between the US and China, which are the world’s two largest economies. Here’s more from the OECD’s Economic Outlook.

• The OECD now expects the global economy to expand by 2.9% this year, which is down from its March projection of 3.1%. The economic organization also revised down its projection for growth in 2026 to 2.9% from 3.0%.
• The OECD says trade tensions could be particularly harmful to the US economy and bring down growth this year. This would also weaken the global economy. The OECD now expects the US economy to grow by only 1.6% this year, down from 2.8% in 2024.
• Inflation is also a concern for the OECD. Further increases in trade tensions could fuel inflationary pressures. Furthermore, supply chains could be disrupted. The OECD is projecting inflation across the G20 of 3.6% in 2025.
• The OECD expects Canada’s economy to expand by 1.0% this year. Canada is facing extensive tariffs from the US, including in key industries such as automotive and energy. Canada’s economy expanded by 2.2%, annualized, in the first quarter but is expected to slow.

The introduction of new tariffs has created a lot of economic uncertainty, which is weighing on the outlook for economic conditions this year and next. The resulting drop in consumer and business confidence has moderated spending, while global trade activity is slowing. Domestically, Canada’s economy is also under pressure, facing high tariffs with its largest trade partner. Canada is trying to offset that by removing barriers to interprovincial trade and nurturing relationships with other countries.

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