OECD Flags Deep Recession Ahead: U.S. to Face Sharpest Slowdown Among Major Economies
The United States is set to experience the steepest economic slowdown among major global economies,
prativad 
Paris/Washington, The United States is set to experience the steepest economic slowdown among major global economies, according to the latest global outlook released by the Organisation for Economic Co-operation and Development (OECD). The report projects that U.S. GDP growth will shrink from 2.8% in 2024 to just 1.6% in 2025, and further down to 1.5% in 2026.
The OECD warns that the global economy is heading into its weakest phase since the COVID-19 pandemic. For the U.S., the expected contraction is being driven by a sharp rise in import tariffs, increasing trade policy uncertainty, a slowdown in net immigration, and a significant reduction in the federal workforce.
Since returning to office in January, U.S. President Donald Trump has imposed sweeping tariffs under a policy campaign dubbed “Liberation Day,” aimed at protecting domestic manufacturing. The move included a blanket 10% duty on all imports from countries such as China, Mexico, Canada, and EU member states. Although some tariffs were paused for negotiations, the strategy has raised inflationary pressure and disrupted global trade dynamics.
The OECD forecasts that inflation in the U.S. could rise to around 4% by the end of 2025—well above the Federal Reserve’s target of 2%—delaying any potential interest rate cuts until late next year. The report also highlights a “notable slowdown” in real GDP growth combined with rising inflation expectations.
Alvaro Pereira, OECD’s Chief Economist, urged governments to negotiate trade deals and reduce barriers, warning of widespread consequences. “If they fail to act, the economic fallout could be severe,” he stated. “The ripple effects will be felt globally.”
Global Growth Forecasts Cut
The OECD now expects global economic growth to slow to 2.9% in both 2025 and 2026—below the average pace of over 3% seen each year since the pandemic-induced recession in 2020.
The Paris-based agency has downgraded forecasts for nearly all major economies compared to its December outlook, noting that “weaker economic prospects will be felt around the world—with almost no exceptions.”
Canada, Mexico, and China Also in Focus
Besides the United States, the slowdown is expected to be most pronounced in Canada, Mexico, and China, highlighting the broad nature of the looming global downturn.
