OECD lifts global growth forecast to 3.2% as front-loading around tariffs fades

The Organization for Economic Cooperation and Development (OECD) has upgraded its global growth forecast for this year to 3.2%, from 2.9% projected in June, after growth in the first half proved more resilient than expected. The OECD cited front-loading of activity as firms rushed to complete deals ahead of new U.S. tariffs and said the momentum helped lift the near-term outlook, while warning that growth would soften noticeably in the second half as the impact of higher tariffs takes hold.

The Paris-based economic think tank also nudged up its projection for the United Kingdom, forecasting growth of 1.4% this year, from 1.3% previously. It kept its forecast for the UK’s growth next year at 1.0%. Chancellor of the Exchequer Rachel Reeves said the forecast upgrade underscored that the British economy had been the fastest growing among G7 peers in the first half of the year, while noting that headwinds remain ahead as tighter fiscal policy and higher trade costs weigh on activity.

In the United States, the OECD raised its growth outlook to 1.8% for this year from 1.6%, helped by robust investment in technology sectors, including artificial intelligence. The report highlighted the ongoing uncertainty stemming from U.S. tariff policy, noting that tariff rates have risen on almost all countries since May and that the overall effective rate reached 19.5% at the end of August—the highest since 1933. The OECD cautioned that the full impact of the tariffs remains to be seen, with some changes phased in over time and some companies accepting thinner profit margins for now. While the early-year surge in activity boosted prospects, the organization said that effect is fading and the growth impulse is shifting.

Growth is expected to soften noticeably in the second half of the year, the OECD said, as front-loading unwinds and higher effective tariff rates on imports to the United States and China dampen investment and trade growth. The report added that tariff-driven shifts in spending, labor markets, and consumer prices are already becoming more visible, and that the path ahead will depend on how quickly tariff effects materialize across economies and sectors.

The OECD also updated its inflation projections for the United Kingdom, forecasting a UK consumer price level of about 3.5% this year, up from 3.1%. The agency pointed to sharper food-price increases partly driving the revision. Official UK data have shown food-price inflation rising for several months, with beef, butter, milk, and chocolate among the items contributing to the pressure.

Reeves signaled that the government’s fiscal stance would feature in the autumn Budget, expected in November. She did not spell out policy specifics, but the OECD’s note on a tighter fiscal environment—whether through higher taxes or lower government spending—helped explain the forecast for slower growth next year.

Across the OECD’s scope, growth remains contingent on the trajectory of trade costs and the degree to which higher tariffs influence business decisions, investment plans, and labor markets. Economies with resilient domestic demand and productivity improvements could see the upgrade translate into stronger near-term momentum, even as the OECD warned of a more challenging second half and the possibility of renewed volatility as policy measures continue to take hold. The organization emphasized that the full impact of tariff changes continues to unfold and will shape the pace of global expansion in the months ahead.