The Organisation for Economic Co-operation and Development (OECD) has revised its economic growth projections upwards for major economies, including the United States and the eurozone, citing a surprisingly resilient global performance in the face of ongoing challenges. The update was released on Tuesday, December 2, 2025.
Upward Revisions for Key Economies
In its latest world economic outlook report, the OECD pointed to stronger-than-expected demand as a key factor. This resilience comes despite headwinds from new trade barriers, political uncertainty, and a decline in investment. The organisation now forecasts that the American economy will expand by 2.0% in 2025, which is an increase of 0.2 percentage points from its previous estimate in September.
For the eurozone, the growth outlook has also been improved. The OECD now expects a 1.3% expansion in 2025, up by 0.1 points from the September forecast. The organisation credited easier global financial conditions, supportive government policies, growth in real incomes, and robust demand for investments linked to artificial intelligence, particularly in the US, for bolstering economic activity.
Global Growth Trajectory and Emerging Risks
Globally, the economy is on track to grow by 3.2% in 2025, a slight moderation from the 3.3% recorded last year. A further slowdown to 2.9% is anticipated for 2026, before a rebound to 3.1% is projected for 2027. China's economy is also expected to perform slightly better than previously thought, with growth now pegged at 5.0% for 2025.
However, the OECD cautioned that the outlook remains fragile. Growth is likely to soften in the latter half of 2025 as higher tariffs increase costs for businesses and consumers. Persistent geopolitical tensions and policy uncertainty are also expected to weigh on demand.
Specific Downside Threats Highlighted
The report identified several concrete risks that could derail the recovery. A key concern is the potential for abrupt corrections in asset prices, driven by what the OECD sees as excessively optimistic valuations of AI-related companies. The organisation warned that if expectations for AI-driven corporate earnings are not met, a sharp market adjustment could occur.
Other significant risks include:
- Further escalation of trade barriers, which could severely damage global supply chains and output.
- Fiscal vulnerabilities in many countries, which may push long-term sovereign borrowing costs higher, tightening financial conditions and hampering growth.
Looking ahead to 2026, the OECD expects a recovery, aided by the fading impact of higher tariffs, continued favourable financial conditions, and lower inflation. The organisation noted that emerging-market economies in Asia will continue to be the primary engine of global growth during this period.
