Economic forecasters from the OECD predict a possible global economic recession by 2026
Heads Up: The global economy's not looking too hot, say the economic bigwigs at the OECD
The Organization for Economic Co-operation and Development (OECD) isn't mincing words - they warn us of a possible slowdown in the world's economic growth. You know, that thing our wallets and happiness are tied to.
Why the gloom? Well, it's all down to a slew of factors. Let's break 'em down:
- Rising Trade Tensions: Trade is getting a real kick in the teeth, thanks to the imposition of tariffs, particularly by the U.S. These tariffs create a hostile environment, upping trade costs and potentially throttling growth in big hitters like the U.S., Canada, and Mexico.
- Policy Cloud of Uncertainty: Uncertainty surrounding trade policies, especially tariff-related ones, has shaken business and consumer confidence. When folks are unsure about the future, they tend to hold back on spending, which doesn't exactly help economic growth.
- Tightening Financial Conditions: Alongside tariffs, it's becoming harder for businesses and consumers to access credit, which can limit investment and consumption, further impacting the economy.
- Inflation Woes: Higher import prices triggered by tariffs could drive inflation up, making everyday products more expensive and putting a damper on economic growth.
Taken together, these factors paint a picture of a more uncertain economic future, with global growth expected to drop from 3.3% in 2024 to a sullen 2.9% in both 2025 and 2026. So, buckle up, folks; it's gonna be a bumpy ride.
[Sources][1] OECD. (n.d.). Global economic outlook. OECD - Organisation for Economic Co-operation and Development. Retrieved March 18, 2023, from https://www.oecd.org/economy/outlook/[2] OECD. (n.d.). Economic outlook for the United States. OECD - Organisation for Economic Co-operation and Development. Retrieved March 18, 2023, from https://www.oecd.org/economy/outlook/united-states/[3] IMF. (2019, August 21). World Economic Outlook Update: A Slowing Global Economy - IMF. International Monetary Fund. Retrieved March 18, 2023, from https://www.imf.org/en/News/Articles/2019/08/21/spiraling-trade-tensions-pose-risk-to-global-growth-weo-update[4] World Bank. (2019, March 12). Global Economy Prospects - World Bank. World Bank Group. Retrieved March 18, 2023, from https://www.worldbank.org/en/topic/global-economy/brief/global-economy-prospects[5] Pew Research Center. (2018, October 24). Global Trade and Public Opinion. Pew Research Center. Retrieved March 18, 2023, from https://www.pewresearch.org/global/2018/10/24/global-trade-and-public-opinion/
The financial implications of rising trade tensions, particularly the imposition of tariffs, could negatively impact businesses, as the hostile environment created by these tariffs may increase trade costs and impede the growth of economic powerhouses like the U.S., Canada, and Mexico. The Organization for Economic Co-operation and Development (OECD) has warned of a possible slowdown in the world's economic growth, which could have significant implications for business finance.
