"Global growth is holding up better than expected as an artificial intelligence (AI) investment boom helps offset some of the shock from United States tariff hikes, according to the Organisation for Economic Co-operation and Development (OECD). The Paris-based organisation, however, warned on Tuesday that global growth was vulnerable to any new outbreak of trade tensions, while investor optimism about AI could trigger a stock market correction if expectations are not met."
"In its Economic Outlook, the OECD forecast global growth would slow modestly from 3.2 percent in 2025 to 2.9 percent in 2026, leaving its forecasts untouched from its last estimates in September. It predicted a rebound to 3.1 percent in 2027. OECD head Mathias Cormann said the trade shocks triggered by US President Donald Trump's tariff hikes had so far proved relatively mild, but added their costs were likely to rise."
Global growth is forecast to slow modestly from 3.2 percent in 2025 to 2.9 percent in 2026, with a rebound to 3.1 percent in 2027. AI investment, fiscal support and expected US Federal Reserve rate cuts are cushioning the impact of higher US tariffs, reduced immigration and federal job cuts. The full effects of recent US tariff hikes will become clearer as firms run down elevated inventories, increasing potential costs. The US fiscal trajectory shows large budget deficits and rising debt that will require significant adjustment. China's growth is expected at 5 percent in 2025, easing to 4.4 percent in 2026. Global growth remains vulnerable to renewed trade tensions and overoptimistic AI expectations.
Read at www.aljazeera.com
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