The OECD has downgraded its growth forecast for the global economy this year, citing current and future tariffs imposed by US President Donald Trump.
The latest economic outlook of the Organisation for Economic Co-operation and Development came out on Monday.
It projects the world’s economy to grow 3.1 percent in 2025, down 0.2 points from its December forecast.
The prediction assumes that the US maintains tariffs on steel and aluminum imports. It also contains a scenario in which the US goes ahead with announced additional tariffs on China, Canada and Mexico and that these countries hit back with levies of their own.
By country, the OECD cut its growth projection for the US by 0.2 points to 2.2 percent. Canada is down 1.3 points to 0.7 percent, and Mexico 2.5 points to minus 1.3 percent.
As for the Eurozone, the OECD believes that heightened geopolitical and policy uncertainty is still likely to restrain growth. It downgrades the bloc by 0.3 points to 1.0 percent.
The organization expects Japan’s growth to be 1.1 percent, down 0.4 points from the previous forecast.
The OECD warns against further fragmentation of the global economy.
It says that higher and broader trade barriers would hit growth around the world and add to inflation. It goes on to say that the higher-than-expected price-growth would prompt more restrictive monetary policy and could give rise to “disruptive repricing” in financial markets.