The global economic outlook is becoming increasingly uncertain, with a projected slowdown in growth and persistent inflationary pressures. Recent forecasts indicate that global growth will decline to 3.1% in 2025 and further to 3.0% in 2026, showing significant variation across different countries and regions. For instance, GDP growth in the United States is expected to be 2.2% in 2025 before dipping to 1.6% in 2026, while the euro area’s growth is projected at 1.0% in 2025 and 1.2% in 2026.
China’s growth is also anticipated to decrease from 4.8% this year to 4.4% by 2026. Inflation rates remain a concern, as they are projected to be higher than previously anticipated, even though they are moderating due to softer economic growth. Services price inflation continues to be elevated due to tight labor markets, while goods price inflation has started to rise in some areas, albeit from low levels.
In G20 economies, annual headline inflation is estimated at 3.8% in 2025 and 3.2% in 2026, revised upwards by 0.3 percentage points since the last economic outlook. OECD Secretary-General Mathias Cormann noted that the global economy has shown resilience, with steady growth and declining inflation. However, rising policy uncertainty and increasing trade restrictions pose risks, potentially leading to higher production and consumption costs.
The outlook outlines critical risks, including the possibility that further fragmentation of trade could undermine global growth prospects. Additionally, macroeconomic volatility remains a threat, as unexpected downturns and changes in policy could lead to market corrections and capital outflows, particularly in emerging markets. High public debt and inflated asset valuations exacerbate these risks.
To address these issues, central banks must stay vigilant, ensuring that policy rate reductions continue in economies where inflation is expected to ease. The report emphasizes the need for decisive fiscal measures to maintain debt sustainability and prepare for future challenges. Structural reforms are essential to enhance productivity and invest in new technologies, with a focus on education and skills development, as well as reducing market constraints.
Leveraging artificial intelligence (AI) has the potential to significantly boost productivity over the next decade, provided that policies support its adoption and facilitate labor reallocation.