Global economic growth will slow down this year due to US President Donald Trump's trade policies, according to the latest OECD Economic Outlook.
The organisation revised down its forecasts for global growth this year and warned of an uncertain outlook for inflation, as trade tariffs increase the cost of doing business.
US growth is expected to slow sharply from 2.8% last year to 2.2% in 2025 and 1.6% next year, the weakest since 2011, excluding Covid.
Trump's trade policies are expected to push Mexico into a recession, with Canadian GDP forecasts slashed in half compared to a December estimate.
The OECD now expects the UK’s economic growth to outperform the rest of the Eurozone and Canada this year and next, rising from 0.9% last year to 1.4% this year (though down from 1.7% forecast in December) and 1.2% in 2026 (down from 1.3%).
Euro area GDP growth is projected to improve from 0.8% last year to 1.0% in 2025 and 1.2% in 2026, while China's growth is projected to slow from 5.0% last year to 4.8% this year and 4.4% in 2026.
"Recent activity indicators have begun to point to a softening of global growth prospects," the report said. "Business and consumer sentiment have weakened in some countries, and indicators of economic policy uncertainty have risen markedly around the world.
"Significant changes have occurred in trade policies that if sustained would hit global growth and raise inflation."
The OECD also predicts that inflation will be higher than previously expected, although still moderating as economic growth softens.
Headline inflation in the G20 economies is projected to fall from 5.3% last year to 3.8% in 2025, with core inflation projected to remain above central bank targets in many countries in 2026, including the US.
The projections assume the US goes ahead with imposing 25% tariffs on most imports from Canada and Mexico, hitting growth around the world and adding to inflation.
Higher government spending on defence, as has been proposed in Germany, the UK, France and other countries in Europe, could also support growth in the near-term, the report said, but potentially add to longer-term fiscal pressures.