OECD: Global Economy at a Crossroads, Protectionism Threatens Recovery

The global economy stands at a critical crossroads, with protectionism threatening any meaningful recovery, according to a new report from the Organization for Economic Co-operation and Development (OECD). The OECD has significantly lowered its global economic growth projections, now anticipating a decline from 3.3% in 2024 to 2.9% in both 2025 and 2026, a clear indicator of the challenges ahead.
The OECD’s latest outlook report states unequivocally that “weakened economic prospects will be felt around the world, with almost no exception.” It predicts that “lower growth and less trade will hit incomes and slow job growth,” signaling a pervasive negative impact on livelihoods globally. The United States, Canada, Mexico, and China are specifically identified as major contributors to this anticipated global economic decline.
A key concern highlighted by the OECD is that “protectionism” will put pressure on inflation, leading to higher costs for goods and services. This directly challenges the idea that tariffs are beneficial for domestic economies, instead suggesting they will burden consumers. The report also highlights the elevated risk this poses for developing nations, particularly those with high levels of public debt, as they navigate increased borrowing costs and refinancing needs.
In response to these looming threats, the OECD advises central banks to “remain vigilant” in monitoring inflation, even if immediate interest rate hikes are not anticipated. Furthermore, the report underscores the critical need for increased investment to revitalize economies and strengthen public finances, acknowledging that debt-laden governments may face hurdles in funding essential projects.