OECD Slashes Growth Forecasts for Canada, Mexico, and US Amid Trade Turmoil
The Organisation for Economic Co-operation and Development (OECD) has significantly downgraded its economic growth forecasts for Canada, Mexico, and the United States, citing escalating trade tensions and the inflationary impact of tariffs.
In its latest report, the OECD predicts Canada’s GDP will grow by just 0.7% this year and in 2026, a sharp decline from the previous forecast of 2% for both years. Mexico’s economy is now expected to contract by 1.3% this year and shrink a further 0.6% in 2025, reversing earlier projections of growth. Meanwhile, the US economy is also feeling the sting of its own trade policies, with growth downgraded to 2.2% this year and 1.6% in 2025, down from earlier estimates of 2.4% and 2.1%, respectively.
The OECD attributes the slowdown to the ongoing trade turmoil sparked by US tariffs on steel, aluminum, and other goods, as well as investor uncertainty created by what some describe as yo-yo economic policies.
“Significant risks remain,” the OECD warned in its report. “Further fragmentation of the global economy is a key concern. Higher and broader increases in trade barriers would hit growth around the world and add to inflation.”
The organization also noted that the trade tensions are likely to push up inflation, which could result in interest rates remaining higher for longer. Globally, economic growth is expected to slow from 3.2% in 2024 to 3.1% in 2025.
In contrast, the OECD slightly raised its growth forecast for China to 4.8%, despite the US imposing tariffs on Chinese goods.
