Global economic resilience is proving to be stronger than anticipated, driven primarily by a surge in artificial intelligence (AI) investments that are helping to buffer against disruptions caused by recent tariff increases from the United States, according to a recent report by the Organisation for Economic Co-operation and Development (OECD). The Paris-based institution offers insights into global economic performance in its latest Economic Outlook.
The OECD cautioned that despite the current positive momentum, global growth remains susceptible to renewed trade tensions, which could undermine market stability. Investor sentiment surrounding AI technologies continues to rise, yet there exists a risk of a stock market correction if the projected outcomes do not materialize as expected.
In its forecast, the OECD estimates that global growth will modestly decline from 3.2 percent in 2025 to 2.9 percent in 2026, aligning with previous predictions made in September. A recovery is anticipated, with growth projected to reach 3.1 percent again by 2027.
OECD Secretary-General Mathias Cormann noted that the impacts of the tariff increases under the Trump administration have thus far been relatively mild; however, he warned that their cumulative costs may escalate as businesses begin to deplete the inventories they had previously stockpiled. This inventory adjustment could lead to a clearer picture of the economic fallout from these tariffs.
In the United States, the economy is projected to expand by 2 percent in 2025, a slight upward revision from the previous estimate of 1.8 percent. This growth is expected to slow to 1.7 percent in 2026, an improvement from the earlier forecast of 1.5 percent. The positive performance is attributed to factors such as strong AI investment, government fiscal support, and anticipated reductions in interest rates by the US Federal Reserve.
Nevertheless, the OECD highlights concerns regarding the sustainability of US fiscal policy, citing significant budget deficits and escalating national debt. Major adjustments will be necessary in the coming years to address these challenges.
Global trade growth is also expected to decelerate, with projections indicating a drop from 4.2 percent in 2025 to 2.3 percent in 2026 as the implications of tariff adjustments begin to take full effect. This economic landscape presents ongoing challenges, with heightened trade policy uncertainty potentially curbing recovery prospects.
Inflation is predicted to return gradually to target levels set by central banks across major economies by mid-2027. In the US, inflation may peak in mid-2026, largely due to the influence of tariffs, before beginning to taper. Other economies, including China, may experience slight rises in inflation as production capacities stabilize.
Overall, while global economic forces present both opportunities and threats, the promise of AI investment remains a significant driver, aiming to outweigh potential negatives and contribute positively to future growth trajectories.
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