Trump factor: global economic growth forecast downgraded
17 March 16:56
The Organization for Economic Cooperation and Development predicts that in 2025 the global economy will grow by 3.1% instead of the previously expected 3.3%. This is reported by DW, Komersant ukrainskyi informs.
The corresponding report of the Organization for Economic Cooperation and Development (OECD) was published today in Paris.
What influenced the decline in forecasts
The OECD’s downward revision of its forecasts took place against the backdrop of large-scale restrictions on trade relations with foreign countries imposed by the administration of US President Donald Trump.
Back in December, the organization predicted 3.3% growth in 2025 and 2026. In 2024, the figure was 3.2 percent. The forecast for 2025 is already 3.1 percent.
According to OECD experts, the latest economic data indicate a weakening of global growth prospects.
“Significant changes have taken place in trade policy,” they explain and point to significant risks to the economy.
According to the OECD, the main problem is the increasing fragmentation of the global economy. Further increase in trade barriers, according to experts, will harm global economic growth and contribute to inflation.
The forecast has been downgraded not only for Canada, Mexico, and the eurozone, but also for the United States
The growth of the world’s largest economy, the United States, will be 2.2 percent in 2025 instead of the previously expected 2.4 percent, and 1.6 percent in 2026 instead of 2.1 percent, the report says.
A similar forecast for Canada has been lowered from 2.0 percent to 0.7 percent for the current and next year.
In Mexico, GDP is expected to decline by 1.3 percent in 2025.
The euro area’s economic growth forecast has been lowered from 1.3 percent to 1.0 percent in 2025 and from 1.5 percent to 1.2 percent in 2026.
Germany, according to the OECD, can expect only minimal economic growth of 0.4 percent this year, which is 0.3 percentage points less than previously expected.
At the same time, the OECD has improved its forecast for economic growth in Russia to 1.3 percent instead of the previously predicted 1.1 percent in 2025. However, negative dynamics are forecasted in the future: next year, the forecast for Russian GDP growth is confirmed at only 0.9 percent.
Can the situation change for the better
In its forecasts, the OECD assumed that the trade restrictions imposed by Trump would remain in place. If these restrictions can be eased, a positive trend is possible. According to experts of the Organization for Economic Cooperation and Development, this may also be facilitated by the stabilization of the political situation in Germany.
But for now, the scale of trade wars is growing
As you know, on February 1, Donald Trump imposed duties on goods from Canada in the amount of 25%. On the same day, Ottawa announced that it was imposing retaliatory tariffs of 25% on goods imported from the United States totaling 103 billion euros. These restrictions lasted less than two days, and on February 3, they were suspended for a month for negotiations.
However, the consultations did not yield any results, and on March 4, the US duties came back into force, affecting almost all imports from Canada.
At the same time, duties on Chinese goods were doubled to 20%. China quickly responded by imposing a 15% duty on imports from the United States, including poultry, wheat, corn, and cotton.
On March 11, the US President raised duties on steel and aluminum from Canada to 50%. This was Trump’s response to the increase in electricity fees supplied to the northern states of the United States from the Canadian province of Ontario.
On the night of March 12, US tariffs on steel and aluminum imports of 25 percent came into effect for the EU and all other US trading partners.
Mexican President Claudia Sheinbaum said that her country would not immediately respond to the steel and aluminum tariffs, but would wait until April 2. Instead, the European Commission has already announced that it will impose retaliatory tariffs on certain categories of American goods, including jeans, whiskey, and motorcycles, starting April 1.
The European Union has also prepared a special response to Trump’s attacks. According to the Financial Times, it is the newly created ACI (Anti Coercion Instrument), which is aimed in particular at American technology companies. It was introduced in December and allows Brussels to block direct investment or restrict market access.
