Donald Trump’s war policies have led the world economy to recession, with them USA to be among the most affected countries, the OECD. The Paris -based organization reduced its worldwide forecasts for the second time this year, citing the impact of the US president’s duties.
The combination of commercial barriers and uncertainty affects trust and holds investment, the OECD said, while also warning that protectionism adds inflationary pressures. OECD now predicts that Global economic growth will slow down at 2.9% this year from 3.3% in 2024. It expects that the expansion rate in the US will fall further to 1.6% from 2.8% – A perspective that is significantly lower than its prediction in March.
“The weakened economic prospects will be felt around the world, with almost no exception,” said Alvaro Pereira’s head of economists. “The lowest growth and the smaller trade will hit incomes and slow down employment.”
Estimation shows how Trump’s policies have become the most pressing problem for the global economy, without an easy solution. The situation could still be aggravated by retaliation by US trade partners, further erosion of trust or another explosion of financial markets, the OECD said.
The Club of the 38 rich countries published its forecasts just when the ministers of its members are convened in Paris for the annual meeting. Top trade officials are expected there, such as US Commercial Representative Jameson Green and EU Commissioner Maros Sefzovic.
Lin Feng, a spokesman for the Chinese Ministry of Commerce, is also scheduled to attend. “The agreements to alleviate commercial tensions and reduce duties and other commercial barriers will be crucial to the rejuvenation of growth and investment and to avoid prices rising,” the OECD said. “This is by far the most important political priority.”
However, the Agency also said that, even if Trump reveals his course on tariffs, bonuses in growth and inflation will not be implemented immediately due to the persistent burden on increased uncertainty about politics.
For the USthe OECD has said that restrictions on migration and a significant decline in the federal workforce add to the burden of trade -related economy. He also warned that the budget deficit would be further expanded, as the influence of weaker economic activity would overcome cost cuts and duties.
“The main adverse winds are the lowest growth of exports as a result of retaliation from commercial partners, the impact of high political uncertainty and the significant slowdown in net immigration,” said OECD Matthias Secretary General (3.6).
Inflation in the US will also move higher this year, making it possible that the US Federal Bank (FED) will not continue its relaxation policy before 2026, according to the OECD. This process can even be derailed if expectations for consumer prices are discouraged, he added.
For central banksthe OECD also urged constant vigilance. Although it expects that inflation will be reduced to their targets in 2026, this process will last longer and the price rhythm can even increase before relaxing again, he said.
In addition to the impact of world trade, the Agency also warned that the fiscal risks are exacerbated worldwide, with “huge” pressure on more costs on defense, climate and aging population. He called on governments to reduce unnecessary costs and increase revenue by expanding the tax base.