As of June 2025, the global economy is facing a significant slowdown. The Organization for Economic Co-operation and Development (OECD) has revised its growth forecast, projecting a drop in worldwide economic growth from 3.3% in 2024 to 2.9% in both 2025 and 2026. This slowdown is largely due to rising trade tensions and protectionist policies, especially from major economies like the United States.
One of the key factors behind this decline is the return of aggressive trade policies. The U.S. has reintroduced high tariffs on imports, which has disrupted global trade. In response, other countries have also taken similar actions, creating a cycle of retaliation that affects international markets. This environment of uncertainty is making businesses across the globe hesitant to invest, expand, or take risks.
Another issue is inflation. Prices of goods and services are increasing due to higher import costs caused by tariffs. In many developed countries, inflation is expected to reach over 4% this year. This affects not only the purchasing power of consumers but also puts pressure on central banks to raise interest rates, which can further slow down economic activity.
The slowdown is being felt differently across regions. In the United States, growth is expected to decline from 2.8% in 2024 to around 1.6% in 2025. The country is also facing a growing budget deficit, predicted to hit 8% of its GDP by 2026. China, while still growing, is expected to see its growth ease from 5% to 4.3% over the next two years, despite attempts to stimulate its economy. In Europe, the eurozone is showing slightly better resilience, but still with modest growth projections between 1% to 1.2%.
Overall, the global economic outlook remains uncertain. Trade tensions, inflation, and cautious business behavior are combining to create a slower and more fragile recovery. Countries may need to cooperate more closely to stabilize the global economy and restore investor and consumer confidence.
