Global Economy Shows Resilience Amid Challenges in 2025, OECD Reports

The global economy is projected to remain resilient despite significant challenges, according to the OECD’s latest Economic Outlook. The Outlook projects global GDP growth of 3.3% in 2025, up from 3.2% in 2024, and 3.3% in 2026.

Inflation in the OECD is expected to ease further, from 5.4% in 2024 to 3.8% in 2025 and 3.0% in 2026, supported by the still restrictive stance of monetary policy in most countries. Headline inflation has already returned to central bank targets in nearly half of the advanced economies and close to 60% of emerging market economies.

PARIS — Labour markets are gradually easing, yet unemployment remains historically low, according to the latest OECD Economic Outlook. Strong nominal wage growth and ongoing disinflation have bolstered real household incomes, but consumer confidence remains weak, keeping private consumption subdued in most countries.

Global trade volumes are recovering, with a projected 3.6% increase in 2024, signaling improving economic momentum. However, regional growth prospects diverge significantly. The United States is expected to see GDP growth of 2.8% in 2025, slowing to 2.4% in 2026. The euro area is projected to grow by 1.3% in 2025 and 1.5% in 2026, driven by improved household incomes, tight labor markets, and reduced interest rates. Meanwhile, Japan’s growth is forecast at 1.5% in 2025, declining to 0.6% in 2026. China’s economy is predicted to decelerate further, with growth of 4.7% in 2025 and 4.4% in 2026.

“The global economy has proved resilient. Inflation has declined further towards central bank targets, while growth has remained stable,” OECD Secretary-General Mathias Cormann said. “But significant challenges remain, including geopolitical tensions, high public debt, and weak medium-term growth prospects.”

The report highlights heightened uncertainty, with potential disruptions from conflicts in the Middle East and rising trade tensions posing risks to energy markets and trade growth. Financial markets could face disruptions from unexpected economic shocks or deviations in the disinflation trajectory. However, improved consumer confidence or resolutions to geopolitical conflicts could boost growth prospects.

To address these challenges, the OECD urges coordinated policy actions. Central banks in advanced economies, except Japan, are advised to continue reducing policy rates cautiously to ensure inflationary pressures remain contained. Fiscal policy must focus on stabilizing public debt through tighter spending controls and enhanced revenue measures.

“Structural reforms are essential to lay the foundations for stronger, sustainable growth,” said OECD Chief Economist Alvaro Pereira. The report emphasizes the need for enhanced education and skills development to address labor shortages, particularly as aging populations threaten future workforce participation.

The OECD also calls for ambitious reforms to reduce constraints on business investment and labor mobility, which are critical for boosting productivity and economic resilience. Policymakers are encouraged to balance short-term stabilization measures with long-term strategies to secure sustainable growth.

“Labour shortages are already a challenge for firms in many countries, and population aging will only exacerbate this,” Pereira added. “Policy action needs to ensure skills align with labor market demands, and that participation, especially among older workers and women, rises.”

Despite the risks, the OECD suggests that growth could surprise on the upside if consumer confidence strengthens or geopolitical tensions ease, providing a glimmer of hope amid a complex global economic landscape. 🌎