Global economic growth is holding up better than expected, according to the OECD. A major reason is the global boom in artificial intelligence investment, which is helping balance out the negative effects of recent U.S. tariff increases. The OECD now expects global growth to be 3.2% in 2025 before slowing slightly to 2.9% in 2026. The U.S., China, and the eurozone all received small upgrades in their growth forecasts, supported by strong labor markets, AI investment, and government spending. However, the OECD warns that new trade tensions or unrealistic expectations about AI could threaten this resilience.
Despite the positive outlook, the OECD highlights several risks. U.S. tariffs could become more damaging as companies run out of inventory, and America’s rising budget deficits are considered unsustainable. China’s growth is expected to slow in 2026 as U.S. tariffs tighten, and global trade growth is predicted to weaken due to uncertainty. Inflation is expected to ease gradually, allowing central banks like the Federal Reserve to begin cutting interest rates by late 2026. Overall, the world economy is proving surprisingly resilient, but still vulnerable to policy mistakes and trade conflicts.
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