AUS
NZ
UK
CA
USA
IND
Highlights
- OECD lowers 2025 global growth forecast to 2.9%
- US and China expected to see notable economic slowdowns
- Inflation and trade costs remain major risk factors
The global economic momentum is showing signs of fatigue, with the OECD cutting its 2025 growth forecast to 2.9%—a notable revision from the previously projected 3.1%. This adjustment follows a streak of economic downgrades and comes as key economies including the US and China face tightening financial conditions, increased trade barriers, and persistent geopolitical instability.
In its latest report, the OECD pointed to the US as a key contributor to the slower growth trajectory. After showing resilience in previous years, the US economy is projected to grow by just 1.6% in 2025, down from 2.8% in 2024. By 2026, this figure could dip further to 1.5%. These adjustments follow a previous downgrade earlier this year and reflect the strain from heightened policy uncertainty and ongoing tariff escalations.
China, another global economic heavyweight, is also expected to see moderated growth. The forecast has been lowered to 4.7% in 2025 from 5% in 2024, and further down to 4.3% by 2026. The slowdown in Chinese demand could have ripple effects across sectors that heavily rely on exports, including Australian commodities, impacting companies such as BHP Group Ltd (ASX:BHP).
Interestingly, the eurozone appears to be bucking the trend slightly, with a modest improvement expected—from 0.8% in 2024 to 1.0% in 2025, and 1.2% by 2026. However, global sentiment remains fragile.
Inflation, while easing in many regions, is still susceptible to trade-related shocks. The OECD projects inflation among G20 nations to decline from 6.2% in 2024 to 3.6% in 2025, but warns that tariff hikes and higher trade costs may keep price pressures elevated. This may influence corporate margins and dividend payouts, which is critical information for those tracking ASX dividend stocks.
For Australia, the interplay between global trade and commodity markets will be crucial. Investors keeping an eye on the All Ordinaries index should note that a prolonged global slowdown could impact the performance of sectors tied to international trade.
Policy measures will be central to navigating this uncertain landscape. The OECD recommends maintaining a cautious yet flexible approach to monetary policy. While inflation has come off its peak, the risk of wage-driven price increases remains.
A call for renewed structural reforms also emerged. Investment, especially in digital infrastructure and housing, has stagnated since the global financial crisis. Companies like Xero Ltd (ASX:XRO) that operate in the digital economy may be well-positioned to benefit if supportive reforms take shape.
As global economic challenges mount, ASX200 stakeholders and market watchers will need to stay alert to both the risks and the emerging opportunities that lie ahead.
