OECD's latest economic outlook projects 'softening' in growth with big changes in trade policies

The OECD has yet again signaled a slowdown in South Korea's growth prospects, citing trade tensions and geopolitical uncertainties.

Our Moon Hye-ryeon reports.

"Steering Through Uncertainty" is what the Organisation for Economic Cooperation and Development is calling the current global economic situation, forecasting a gradual slowdown in global economic growth over the next three years.

Its interim economic outlook, published on Monday, anticipates that global economic growth will moderate, projecting figures of 3-point-1 percent for 2025 and 3 percent for 2026.

Notably, the growth forecast for this year has been revised downwards by point-two percentage points compared to the previous projection given in December last year.

The OECD highlights that while the global economy has remained "resilient," recent economic activity indicators suggest a softening of global growth prospects.

Significant changes in trade policies were outlined as a critical concern – as the new Trump administration rolls out sweeping tariffs – warning that these shifts could impede economic growth and contribute to rising inflation.

The organization also noted that inflationary pressures persist across numerous nations.

Regional variations in economic performance are expected.

In the United States, growth is projected to slow due to the implementation of increased tariffs, with forecasts of 2-point-2 percent this year, while China's economy is expected to maintain relatively robust growth, with forecasts of 4-point-8 percent in 2025.

However, Canada and Mexico are projected to be severely negatively impacted by the new U.S. tariffs.

As for the South Korean economy, it is projected to grow at a subdued pace of 1-point-5 percent this year, and 2-point-2 percent next year.

The 2025 South Korea growth projection has also been revised downwards, reflecting the general trend of reduced growth forecasts among major economies, and falls in line with forecasts from other major institutions.

The Bank of Korea adjusted its forecast for domestic economic growth this year also to 1-point-5 percent back in February, while the Korea Development Institute revised its forecast to 1-point-6 percent.

Going forward, the OECD's policy recommendations advise central banks to navigate potential increases in trade costs and has called for international cooperation to address trade concerns, structural reforms to promote competition, and support for growth in productivity through the integration of artificial intelligence technologies.

Moon Hye-ryeon, Arirang News.