According to the Organisation for Economic Cooperation and Development (OECD) the global economy is expected to grow more slowly this year, with growth predicted to be 2.9% in both 2025 and 2026, compared to 3.3% last year.
The OECD cited growing uncertainty on the back of US trade policies under the Trump administration as a major cause. If there is one thing that has always been clear, it is that market participants hate uncertainty.
The report warns that more trade barriers could hurt growth, lower incomes, and slow job creation. The U.S. economy is expected to grow only 1.6% this year, down from 3.3% in 2024, due to tariffs, less immigration, and government job cuts.
The OECD noted that higher trade costs, especially in countries raising tariffs, will increase inflation, though weaker commodity prices will help offset this. While inflation is slowing in many areas, service prices remain high, and rising government spending, especially on defense, needs careful management.
These developments will only serve to reinforce the belief that a global slowdown may be on the way and could weigh further on the already fragile market sentiment we have seen at the start of the week.
Potential trade deal announcements are sorely needed to allay the fears of market participants as anticipation and anxiety continue to build.
