U.S. and global growth forecast lifted by OECD as economies surprise to the upside

The Organisation for Economic Co-operation and Development upgraded its global economic growth forecast on Tuesday, with many economies appearing more resilient than expected so far this year.

The OECD now expects global growth of 3.2% this year, compared to the 2.9% expansion it had forecast in June. Expectations for 2026 were unchanged at 2.9%. This would mark a slowdown from the 3.3% growth seen in 2024.

Growth expectations for the U.S. were also lifted, to 1.8% for 2025, compared to June's 1.6% estimate. This still marks a significant fall from 2024's 2.8% growth, however. The organization forecasts 1.5% growth for the U.S. in 2026.

"Global growth was more resilient than anticipated in the first half of 2025, especially in many emerging-market economies," the organisation said in a new report.

"Industrial production and trade were supported by front-loading ahead of higher tariffs. Strong AI-related investment boosted outcomes in the United States and fiscal support in China outweighed the drag from trade headwinds and property market weakness," it noted.

The OECD warned, however, that "significant risks to the economic outlook remain," as investment and trade continue to be hit by high levels of policy uncertainty and elevated tariffs.

Sweeping duties on goods entering the U.S. came into effect in August after months of policy changes, temporary pauses, and threats from U.S. President Donald Trump.

Countries and regions around the world now face tariff rates as high as 50% on their exports to the U.S., with some still trying to negotiate trade frameworks.

"US bilateral tariff rates have increased on almost all countries since May. The overall effective US tariff rate rose to an estimated 19.5% at the end of August, the highest rate since 1933," the OECD said.

"The full effects of tariff increases have yet to be felt – with many changes being phased in over time and companies initially absorbing some tariff increases through margins – but are becoming increasingly visible in spending choices, labour markets and consumer prices," it added.

Labour markets are showing signs of softening as some countries see higher unemployment and fewer job openings, according to the report, while the disinflation process appears to have flattened.

The OECD now expects headline inflation to amount to 3.4% across G20 countries in 2025, slightly lower than June's 3.6% projection. Inflation expectations for the U.S. were revised down more sharply, with the OECD now forecasting price rises of 2.7% in 2025, down from the previous 3.2% forecast.

Looking ahead, further tariff increases and a return of inflationary pressures were flagged in the organization's report as two key risks, alongside growing concerns about the fiscal situation and the possibility of repricing in financial markets.

"High and volatile crypto-asset valuations also raise financial stability risks given growing interconnectedness with the traditional financial system. On the upside, reductions in trade restrictions or faster development and adoption of artificial intelligence technologies could strengthen growth prospects," the OECD noted.