World Economic Prospects
Each month Oxford Economics’ team of 300 economists updates our baseline forecast for 200 countries using our Global Economic Model, the only fully integrated economic forecasting framework of its kind. Below is a summary of our analysis on the latest economic developments, and headline forecasts. To access the full report (and much more), request a free trial today.
Request a free trial
Positive tariff news does little to dispel overall uncertainty
- We’ve nudged up our world GDP growth forecasts for 2025 and 2026 by 0.1ppt to 2.4%, in part to reflect the temporary but substantial reduction in tariffs between the US and China. Despite the favourable tariff news, uncertainty about US trade policy remains high and the outlook is still less favourable than envisaged prior to the tariff announcements in early April.
- This month, we have made two changes to our tariff assumptions that underpin our economic forecasts. First, we assume that the de-escalation of tensions between the US and China will last and that the temporary reduction in tariffs rates will be permanent, boosting bilateral trade between the US and China relative to what we assumed a month ago. Second, we have raised our projection of the US tariff rate on imports of aluminium and steel to 50%.
- Despite a federal court declaring that most of the tariffs US President Donald Trump has imposed are illegal, we have not made broader adjustments to our tariff assumptions. For now, the tariffs remain in place, and regardless of the legal twists and turns to come, the administration has other means at its disposal to keep tariffs high. While the legal development hasn’t prompted us to shift our tariff assumptions, it illustrates that there are significant tariff risks in both directions.
- Business surveys continue to suggest that US tariff policy is prompting world growth to slow but not plunge, which is consistent with our longstanding view. Since April, the JP Morgan Global Manufacturing PMI has remained below 50, thereby indicating a modest contraction in activity, but the latest reading is still roughly in line with the average of the preceding two years. Comfortingly, much of the fall in the global services PMI recorded in April was reversed in May.
- Recent trade data show a sharp drop in US imports in April, signalling that tariffs are beginning to have an effect. But this is broadly supportive of our existing assessment. Our forecasts already assume sharp falls in US imports over the remainder of this year, along with a more moderate contraction in global trade.
Request a Free Trial
Complete the form below and we will contact you to set up your free trial. Please note that trials are only available for qualified users.
We are committed to protecting your right to privacy and ensuring the privacy and security of your personal information. We will not share your personal information with other individuals or organisations without your permission.
Find out how Oxford Economics can help you
Talk to us
