Global Economy Shows "Remarkable Resilience" Despite Headwinds
The global economy continues to show "remarkable resilience" despite significant challenges, according to a new analysis. Still, growth forecasts are mixed as the spectre of renewed protectionism looms large.
The OECD projected a stable global growth rate of 3.2 this year, 3.3% next year and in 2026. This modest improvement in 2025 is primarily driven by a spike in US growth projections, which are now anticipated to reach 2.4%, up from 1.6% previously, primarily attributed to robust consumer spending,
However, the OECD warned of a looming threat: a resurgence of protectionist measures. The concerns come just two months before Donald Trump’s likely return to the White House following a campaign built aroundHiking tariffs on imported goods in the name of "America First."
Beyond Trump, protectionism has gained momentum since the COVID-10 pandemic exposed the vulnerabilities of global supply chains and the war in Ukraine intensified the scramble for resources. Trade tensions are further fueled by disputes over electric vehicles, with the EU imposing tariffs on extra-European imports and China retaliating with levies on specified alcoholic beverages.
The potential consequences are significant. The consulting firm Roland Berger estimates that the
cumulative impact of these trade conflicts could cost the EU economy $533 billion by 2029, the US economy
$749 billion and China $827 billion. Aside from the immediate financial hemorrhaging, institutional trust and global economic stability are shakily impacted.
Specifically in Europe, the outlook is mixed. Germany grapples with its slow recovery from the energy crisis.
Despite the robust financial commitment from the EU
"The lingering impacts of the energy crisis and concerns about the future, likely hold back robust investment. Private investment should regain some momentum over time, sustained by corporate savings and the gradual decline in interest rates.
The OECD also adjusted its predictions for France, projecting GDP growth of 0.9% next year, representing a 0.
Amid political turmoil, however, a much-needed boost is expected. The OECD notes that despite these anxieties, external demand has been a leading driver of growth in 2024. Domestic demand is also anticipated to recover immediately in 2025, aided by declining inflationary pressures that could translate into upgrades for consumers.
These altered projections demonstrate both the instability and the ongoing strength of the global economy. Despite persistent
challenges, including the political turmoil, inflation remains a threat that requires ongoing policy intervention
and investment, pushing forward in 2026. In its report, the
Organization highlights a complex picture marked by recovery in the US and to a lesser extent a comeback
The rising price of critical commodities fosters uncertainty about whether the fast growth rates can continue.
– What are some specific examples of the rise in protectionist measures being implemented globally, and what are their potential consequences?
## Global Economy Faces Trade Tension Headwinds Despite Resilience
**Host:** Joining us today to discuss the OECD’s latest report on the global economic outlook is Dr. Emily Carter, Professor of International Economics at Georgetown University. Dr. Carter, thanks for being here.
**Dr. Carter:** It’s a pleasure to be here.
**Host:** The report paints a picture of a surprisingly resilient global economy. Can you elaborate on that?
**Dr. Carter:** Certainly. The OECD is forecasting stable growth rates of around 3.2% this year and 3.3% for the next two years. Notably, this is driven by robust consumer spending in the US, which is projected to see a significant uptick in growth. This resilience is impressive considering the headwinds the global economy has faced in recent years.
**Host:** But those headwinds are far from gone, are they? The report also highlights a worrying trend towards protectionism.
**Dr. Carter:** Absolutely. While consumer spending remains strong in some countries, the specter of renewed protectionism casts a shadow over the global outlook. The OECD specifically warned about this, and it’s a valid concern. We’ve seen a rise in protectionist measures since the COVID-19 pandemic disrupted global supply chains, and the war in Ukraine has further fueled this trend as countries prioritize securing resources.
**Host:** And this is not just a theoretical concern, correct? We see tangible examples of this happening right now.
**Dr. Carter:** Exactly. The United States is on the verge of a potential return to protectionist policies with Donald Trump eyeing a comeback. His campaign is built on a promise to raise tariffs on imported goods, echoing his “America First” agenda from his previous presidency.
Furthermore, we see trade disputes escalating between the EU and China, with tariffs being imposed on electric vehicles and alcoholic beverages, respectively. These disputes have the potential to significantly disrupt global trade and hinder economic growth. [[1](https://www.investing.com/news/economy/protectionism-poses-threat-to-global-growth-outlook-oecd-warns-3753240)]
**Host:** What are the potential consequences of this surge in protectionism?
**Dr. Carter:**
The consequences could be dire. Increased tariffs and trade barriers lead to higher prices for consumers, reduced competitiveness for businesses, and ultimately, slower economic growth. A resurgence of protectionism could potentially negate the positive gains we’ve seen in recent years and lead to a more fragmented global economy. It’s something we need to avoid at all costs.
**Host:** Thank you for your insights, Dr. Carter. This is certainly a crucial issue to watch in the coming months.
