OECD March Economic Outlook flags slowdown in | Australian Markets

Australian financial growth will possible gradual throughout 2026, the OECD warns, as US President Donald Trump’s tariff agenda threatens to hit growth across the world and rekindle inflation.

GDP growth in Australia was 1.1 per cent in 2024, the March report mentioned, and is predicted to rise to 1.9 per cent in 2025 earlier than falling to 1.8 per cent in 2026.

The 2026 fee represents a 0.7 per cent decline on the forecasted growth fee from the OECD’s December report.

“Growth in both Korea and Australia is projected to hold up but to be weaker than previously expected,” the report states.

Throughout most main G20 economies, 2026 growth charges are actually anticipated to be decrease than the growth charges forecast within the December outlook.

Canada’s GDP is predicted to grow at 0.7 per cent, a 1.3 per cent fall from the December projection, whereas Germany is forecast to grow at 1.1 per cent, a 0.1 per cent dip.

The outlook, which predicts trends and growth charges throughout the world’s main economies, singled out President Trump’s disruptions to international trade as a important risk.

“Significant changes have occurred in trade policies that if sustained would hit global growth and raise inflation,” the report’s abstract states.

International growth is now anticipated to average from 3.2 per cent in 2024 to three.1 per cent in 2025 and three per cent in 2026, with “higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending”.

“Inflation is projected to be higher than previously expected, although still moderating as economic growth softens,” the report concludes.

“Headline inflation is projected to fall from 3.8 per cent in 2025 to 3.2 per cent in 2026 in the G20 economies. Core inflation is now projected to remain above central bank targets in many countries in 2026, including the United States.

“These projections are based on an assumption that bilateral tariffs between Canada and the United States and between Mexico and the United States are raised by an additional 25 percentage points on almost all merchandise imports from April.

“Activity would be stronger and inflation lower in all three economies if these tariff increases were lower or confined to a smaller range of goods, but global growth would still be weaker than previously expected.”

Headline inflation in Australia can be anticipated to average from 2025 to 2026, the OECD mentioned, with inflation forecast to be 0.4 per cent decrease from earlier predictions to hit 2.2 per cent in 2026.

“Provided inflation expectations remain well anchored and trade tensions do not intensify further, policy rate reductions can continue in economies in which inflation is projected to moderate,” the report states.

“In the euro area, policy interest rates are projected to ease to 2 per cent by the latter half of 2025, with gradual easing also occurring over the next two years in Australia and the United Kingdom.”

In February, the Reserve Financial institution of Australia cut its benchmark money fee by 25 foundation factors from 4.35 per cent to 4.1 per cent, citing a substantial fall in inflation from the 2022 peak for the transfer.

However RBA Governor Michele Bullock warned repeatedly that “upside risks” remained and the Board would carry charges again in the event that they noticed any reversal in inflation trends.