Kathmandu: The Organization for Economic Cooperation and Development (OECD) has projected a gradual slowdown in global economic growth over the next two years. According to its latest report, the world economy, which grew at 3.3 percent in 2024, is expected to slow to 3.2 percent in 2025 and further down to 2.9 percent in 2026.

Rising Tariffs and Policy Uncertainty Cited

The OECD attributed the slowdown to the end of advanced trade supply systems, rising tariffs, and policy uncertainty, which have weakened global investment and trade. In particular, the United States has sharply raised tariffs with many of its trade partners. By the end of 2025, the US tariff rate is projected to hit 19.5 percent, the highest level since 1933.

Regional Outlooks

United States: Growth is expected to slow to 1.5 percent by 2026. Despite higher investment in technology, restrictive trade and immigration policies are expected to limit expansion.

Europe: The European region is also projected to witness weaker growth, slowing to 1.2 percent in 2025 and 1.0 percent in 2026.

Risks and Policy Recommendations

The report warns of additional risks such as further tariff hikes, inflationary pressures, fiscal imbalances, and financial market instability. To counter these challenges, the OECD stressed the need for deep structural reforms to boost living standards and harness the benefits of emerging technologies.