World economy growth projection by OECD is now lowered to 2.9% in the year 2025
The global economy is projected to experience a moderate slowdown in growth for the years 2025 and 2026, according to various economic forecasts.
According to PwC, global GDP growth was 2.8% in 2024 but is expected to decline to around 2.6% in 2025 and 2026. This slowdown is attributed primarily to escalating geopolitical tensions and rising protectionism. The US and China are forecast to experience slower growth, with China’s growth slowing to about 4.6%, while India is expected to continue strong growth above 6%.
The Organisation for Economic Co-operation and Development (OECD) projects a somewhat higher global growth of 2.9% for both 2025 and 2026, down from 3.3% in 2024. The US growth is expected to slow significantly to around 1.5-1.6%, while the euro area might see modest improvements from 1.0% in 2025 to 1.2% in 2026.
The International Monetary Fund (IMF) projects the US growth at about 1.8% in 2025 and 1.7% in 2026, with Australia expected as one of the fastest-growing advanced economies at about 2.1% by 2026. India remains the fastest growing among key developing countries.
The World Bank’s June 2025 report highlights that global growth could slow further to about 2.3% in 2025, the slowest since 2008 outside global recessions. The report attributes this decline to heightened trade tensions, policy uncertainty, and elevated tariff rates, which dampen trade flows, consumer and business sentiment, and investment growth. Growth in emerging markets and developing economies is expected to slow to 3.8% in 2025, with only a slight recovery in 2026-27.
Factors affecting the global economic growth forecast include geopolitical tensions, rising protectionism and trade tariffs, policy uncertainty, differential regional growth, and investment and foreign direct investment retreat.
Ongoing conflicts, diplomatic strains, and geopolitical rivalries undermine global economic stability and trade cooperation. Increased tariffs and trade barriers have led to slower growth in trade volumes, adversely affecting global supply chains and investment. Ambiguity around trade policies and economic regulations discourages investment and dampens market sentiment.
The US and China, the world's two largest economies, are slowing, while eurozone growth remains subdued due to specific country challenges. However, India and some emerging markets maintain stronger growth rates.
According to OECD Chief Economist Álvaro Pereira, a slowdown in growth and a decline in trade will affect incomes and slow job growth. He linked the revision of its forecasts to the strengthening of trade barriers and increased political uncertainty.
Despite the global slowdown, India's GDP is expected to grow by 6.4% in 2026, offering a bright spot in the global economic landscape.
Businesses and financial institutions may need to adjust their strategies due to the expected decline in global economic growth for 2025 and 2026, as growth rates for major economies such as the US, China, and the eurozone are expected to slow. However, India's economy is forecast to continue strong growth, offering a possible opportunity for businesses seeking stable and robust market conditions.
