Economy
OECD cuts global growth outlook to 2.9% for 2025 due to trade war
Global economic growth is expected to slow down to 2.9%, the OECD said on Tuesday, slashing its earlier forecast and warning that U.S. President Donald Trump’s tariffs blitz will stifle the world economy, hitting the United States especially hard.
After 3.3% growth last year, the world economy is expected to expand by a “modest” 2.9% in 2025 and 2026, according to the Paris-based Organisation for Economic Co-operation and Development (OECD).
In its previous report in March, the OECD forecasted growth to be 3.1% for 2025 and 3.0% for 2026.
Since then, Trump has launched a wave of tariffs rattling financial markets.
“The global outlook is becoming increasingly challenging,” said the OECD, an economic policy group of 38 mostly wealthy countries.
It said “substantial increases” in trade barriers, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have “marked adverse effects on growth” if they persist.
The OECD downgraded its 2025 growth forecast for the U.S. from 2.2% to 1.6%.
The world’s biggest economy is expected to slow further next year to 1.5%.
Trump, who has insisted that the tariffs would spark a manufacturing revival and restore a U.S. economic “Golden Age,” posted on his Truth Social platform before the OECD report’s publication: “Because of Tariffs, our Economy is BOOMING!”
The OECD holds a ministerial meeting in Paris on Tuesday and Wednesday, with U.S. and EU trade negotiators expected to hold talks on the sidelines of the gathering after Trump threatened to hit the EU with 50% tariffs.
The Group of Seven advanced economies is also holding a meeting focused on trade.
“For everyone, including the U.S., the best option is that countries sit down and get an agreement,” OECD chief economist Alvaro Pereira said in an interview with Agence France-Presse (AFP).
“Avoiding further trade fragmentation is absolutely key in the next few months and years,” Pereira said.
Trump imposed a baseline tariff of 10% on imports from around the world in April.
He unveiled higher tariffs on dozens of countries but has paused them until July to allow time for negotiations.
The U.S. president has also imposed 25% tariffs on cars and plans to raise those on steel and aluminum to 50% as of Wednesday.
U.S. slowdown
In the OECD report, Pereira warned that “weakened economic prospects will be felt around the world, with almost no exception.”
He added, “Lower growth and less trade will hit incomes and slow job growth.”
The outlook “has deteriorated” in the U.S. after the economy expanded by a robust 2.8% last year, the report said.
The effective tariff rate on U.S. merchandise imports has gone from two percent in 2024 to 15.4%, the highest since 1938, the OECD said.
The higher rate and policy uncertainty “will dent household consumption and business investment growth,” the report said.
The OECD also blamed “high economic policy uncertainty, a significant slowdown in net immigration and a sizeable reduction in the federal workforce.”
While annual inflation is expected to “moderate” among the Group of 20 economies to 3.6% in 2025 and 3.2% in 2026, the U.S. is “an important exception.”
U.S. inflation is expected to accelerate to just under 4% by the end of the year, two times higher than the target for consumer price increases set by the Federal Reserve (Fed).
Rising risks
The OECD also slightly reduced its growth forecast for China – which was hit with triple-digit tariffs that have been temporarily lowered – from 4.8% to 4.7% this year.
Another country with a sizeable downgrade is Japan: The OECD cut the country’s growth forecast from 1.1% to 0.7%.
However, the outlook for the eurozone economy remains intact at 1%.
Türkiye’s economy, on the other hand, is estimated to expand by 2.9% in 2025 and 3.1% in 2026, which is also down from the previous estimate of 3.1% for this year and 3.9% for 2026.
“There is the risk that protectionism and trade policy uncertainty will increase even further and that additional trade barriers might be introduced,” Pereira wrote.
“According to our simulations, additional tariffs would further reduce global growth prospects and fuel inflation, dampening global growth even more,” he said.
President Donald Trump said on Thursday that China has agreed to order 200 Boeing jets, marking the country’s first purchase of U.S.-made commercial jets in nearly a decade.
No details about the deal were immediately available, but 200 jets would be far fewer than the 500-jet deal that industry sources said had been discussed. It would also be far fewer than the number of new aircraft needed by Chinese airlines to keep up with the country’s booming demand for air travel.
Boeing shares fell more than 4% after the comments were aired.
The White House did not immediately respond to a request for comment on whether Trump was referring to the entire Boeing order or only to narrowbody or widebody planes. Boeing did not immediately respond to a request for comment.
U.S. Treasury Secretary Scott Bessent earlier had said that he expected an announcement about a large Boeing order during Trump’s visit to Beijing, during which he held talks with Chinese leader Xi Jinping.
“One thing he agreed to today, he’s going to order 200 jets … 200 big ones,” Trump told Fox News Channel, referring to Xi.
It was not clear whether Trump was referring to single-aisle 737 Maxes or larger – and much more expensive – twin-aisle 777X or 787 jets used on long-haul flights.
Boeing CEO Kelly Ortberg and GE Aerospace CEO Larry Culp were among the group of American executives who accompanied Trump to China, one of the world’s largest commercial aviation markets, in hopes of clinching deals or resolving business disputes.
During Trump’s November 2017 trip, Beijing agreed to buy 300 Boeing airplanes. However, subsequent trade disputes between the countries effectively shut Boeing out of the world’s second-largest aviation market, which it once dominated.
The fallout between Beijing and Washington, followed by the 737 Max crisis after two fatal crashes, led to the grounding of the plane, as well as later production problems at Boeing, which allowed rival Airbus to cement its lead in the Chinese market. The European planemaker had already been aggressively courting Chinese airlines, even embedding itself into Beijing’s political economy by opening an A320 final assembly line in Tianjin in 2008.
However, China’s aviation market is too big to depend on one planemaker. The country will require at least 9,000 new jetliners by 2045, according to market projections by both Boeing and Airbus.
Trump has aggressively pushed countries during trade talks to boost purchases of Boeing airplanes.
A Boeing deal has been in talks for many months, but geopolitical tensions, trade disputes and fights over intellectual property of advanced aerospace components have foiled earlier attempts to close a deal, according to industry sources familiar with previous negotiations.
Boeing CEO Ortberg last month told Reuters he was counting on the Trump administration’s support to seal a major deal with China.
Shares were down 3.8% at 1400 ET.
President Recep Tayyip Erdoğan on Thursday stressed strong cooperation in the defense industry after Türkiye and Kazakhstan signed a deal to establish a joint venture for the manufacturing of drones.
Erdoğan’s remarks came during a business forum in Astana, where he arrived for an official visit and the informal summit of the Organization of Turkic States (OTS).
Earlier on Thursday, Erdoğan and his Kazakh counterpart, Kassym-Jomart Tokayev, oversaw the signing of 13 agreements spanning investment, energy, defense, education, media and infrastructure.
Among them was an agreement to set up a joint venture for the production and maintenance of drones, the countries said.
The deal covers Anka unmanned aerial vehicles developed by the Turkish Aerospace Industries (TAI). Kazakhstan is already operating several Anka drones, for which it signed a contract back in late 2021. Deliveries were completed by 2023.
Türkiye is among the world’s top unmanned aerial vehicle manufacturers and exporters. Its drones gained prominence globally after being used by Ukraine’s military against Russian forces as well as in campaigns in Azerbaijan and North Africa.
Erdoğan said Türkiye and Kazakhstan enjoy strong cooperation in the defense industry and reaffirmed their intention to deepen ties through new projects, including joint production initiatives.
“We have very good cooperation with Kazakhstan in the field of the defense industry. Today, we confirmed our will to advance this cooperation with new projects, including joint production,” he told the forum.
Trade goal
Kazakhstan was Türkiye’s largest trading partner in the Turkic world in 2025, when their bilateral trade approached $10 billion, but Erdoğan said that was not enough.
“We are not content with this. We are determinedly continuing our efforts to sustainably and balanced reach our target of $15 billion,” he said.
Nearly 5,500 Turkish companies operate in Kazakhstan with investments reaching $6 billion across sectors, including construction, finance, tourism and information technology.
According to Erdoğan, Turkish contractors have undertaken more than 500 projects across Kazakhstan worth nearly $30 billion.
The Turkish president also said more than 750 Kazakh companies are operating in Türkiye with investments approaching $2 billion.
Artificial intelligence, energy cooperation
Later on Thursday, Erdoğan visited Alem.AI, a major international artificial intelligence center, alongside Tokayev.
At the forum, Erdoğan praised Kazakhstan’s advances in AI and welcomed the decision to make artificial intelligence and digital development the main theme of the OTS summit due to be held on Friday in the southern Kazakh city of Turkistan.
Highlighting regional economic challenges, including energy supply security, AI transformation and disruptions in supply chains, the Turkish leader stressed the growing importance of international cooperation.
On the energy partnership, Erdoğan said the two sides discussed opportunities ranging from hydrocarbon production and transportation to the exploration of critical minerals.
“We are a country that has secured its energy supply security by ensuring resource diversification years ago. We wish to transport larger volumes of oil from Kazakhstan to global markets via our country,” he said.
Earlier on Thursday, Turkish Petroleum Corporation (TPAO) and KazMunayGas signed two separate agreements, including a cooperation deal on oil field services and a memorandum on the joint development of oil and gas projects.
Erdoğan added that Türkiye is working to revive the Caspian-transit East-West Middle Corridor by integrating railway connections, port infrastructure and digital customs systems.
“Our goal remains to bring the Eurasian region into a more competitive position in the global economy while bringing our countries closer together,” Erdoğan said.
India’s capital New Delhi introduced fuel-saving measures on Thursday, including work-from-home days for government employees following Prime Minister Narendra Modi appeal for reduced consumption as the Middle East war disrupts supply chains.
India is one of the few countries in the region that has not increased prices of petrol and diesel for domestic consumers or rationed supplies.
However, it has increased prices of liquefied petroleum gas (LPG) – a primary cooking fuel in India – after disruptions following the U.S.-Israeli strikes on Iran that led to Iran’s near-total blockade of the strategic Strait of Hormuz.
Delhi Chief Minister Rekha Gupta said the 90-day drive will entail reduced official fuel use and travel, and a push for residents to cut back on private vehicle use and shift to public transport in the sprawling megacity.
Government offices will have two work-from-home days a week for those able to work remotely, Gupta said, adding that the private sector was expected to follow suit voluntarily.
“Our appeal to the people of Delhi is that once a week, each of us should have a no-vehicle day,” Gupta told reporters.
Other austerity measures will include the cancellation of large official public events over the next three months and foreign travel for a year, she said.
The Delhi government will also halt purchases of new petrol, diesel, compressed natural gas (CNG) or hybrid vehicles for six months, the chief minister said.
Modi said on Sunday that restrictions on fuel use were also necessary to save foreign currency spent on fuel imports.
“We must also place a strong emphasis on saving foreign exchange, as petrol and diesel have become so expensive globally,” he said.
New Delhi has also boosted its import tariffs on gold and silver in an effort to shore up the sagging value of the rupee and bolster foreign currency reserves hit by the war.
The momentum in the property market in Türkiye picked up pace in April as both house and commercial property sales increased in the month, official data showed on Thursday.
A total of 126,808 houses were sold in Türkiye in April, up 2.6% from a year earlier, according to the Turkish Statistical Institute (TurkStat).
The figure compares with 123,569 housing sales recorded in the same month last year and cumulatively looking it is also the highest figure this year so far.
House sales, which are divided into new home sales and second-hand sales, were relatively lower in the first quarter following a record achieved in sales in December last year.
Accordingly, in April, new house sales surged by 9.6% compared to the same month of the previous year, reaching 40,306 units, as per TurkStat.
Second-home sales, meanwhile, decreased by 0.3% over the same period to 86,502 units.
Thus, new house sales accounted for 31.8% while existing house sales accounted for 68.2% of total house sales.
Mortgage-financed home sales jumped 40.5% to 25,771, accounting for 20.3% of total transactions in the same month.
Meanwhile, sales to foreign buyers declined 1.1% to 1,516 units, with Russians, Chinese and Iranians among the top purchasers, data revealed. In January-April, house sales to foreigners decreased by 11.6% year-over-year to 5,681 units.
In the first four months of the year, total house sales stood at 476,204 units, up 0.5% year-on-year.
Commercial property sales, which TurkStat recently included in its monthly housing report, have also increased in April.
New commercial property sales rose by 14.3% on an annual basis, reaching 4,301 units, while second-hand ones were up 8.7% and stood at 11,393 units, respectively.
Turks tend to invest in the residential sector and gold to shield themselves from the surge in consumer prices.
Annual inflation in the country picked up slightly to around 32.4% in April after a long period of declining trend, mainly due to the rise in energy and food prices following the start of the war between the U.S., Israel and Iran.
The Turkish central bank raised its interim inflation targets on Thursday, warning it believed that an inflationary impact would remain present in the short-term due to tensions in the region amid the Iran war.
The Central Bank of the Republic of Türkiye (CBRT) lifted its end-2026 interim inflation target to 24% from the previous 16% and end-2027 target to 15% from 9%, Governor Fatih Karahan said.
Presenting the central bank’s quarterly inflation report in Istanbul, Karahan said the bank set its end-2028 interim target at 9%.
While also setting forecasts at 26%, 15% and 9% for the said years, the governor announced that the bank decided to suspend the forecast range approach.
Annual inflation in Türkiye stood at around 32.4% in April, according to official data.
The British economy grew in line with expectations in the first quarter of the year, official data showed Thursday, offering a rare boost to Prime Minister Keir Starmer as he scrambles to stay in power.
Gross domestic product (GDP) rose 0.6% in the January-March period, up from a revised expansion of 0.2% in the final three months of last year, the Office for National Statistics (ONS) said.
It added that GDP grew 0.3% in March alone, beating analysts’ expectations, despite the economic fallout from the Middle East war.
“Today’s figures show the government has the right economic plan,” Treasury chief Rachel Reeves said after the data release.
The economy “is in a stronger position as we deal with the costs of the war in Iran,” she added. “Now is not the time to put our economic stability at risk.”
The figures come as Starmer battles to face down a revolt within his Labour Party in the wake of heavy defeats in local and regional elections last week.
The elections saw strong gains for the hard-right Reform UK party and the left-wing populist Greens, at Labour’s expense.
The results capped a difficult few months for Labour, which has struggled to revive Britain’s economy since winning a general election in July 2024, having raised taxes in its two annual budgets.
There were signs of progress earlier in the year, with inflation easing toward the 2% target set by the Bank of England (BoE) and unemployment unexpectedly falling in February.
But rising energy prices stemming from the Middle East war, which began with U.S.-Israeli strikes on Iran on Feb. 28, have reignited inflationary pressures and threaten to derail growth.
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