Global growth is holding up better than expected, boosted by an artificial intelligence investment boom despite U.S. tariff hikes, according to the OECD. However, trade tensions could threaten growth. The OECD forecasts global growth to slow modestly from 3.2% in 2025 to 2.9% in 2026 before rebounding to 3.1% in 2027.

The U.S. economy is expected to grow 2% in 2025, revised up from 1.8%, before slowing to 1.7% in 2026. AI investment and fiscal support are offsetting the impact of tariffs. China’s growth is forecast to remain steady at 5% in 2025 before slowing to 4.4% in 2026 due to fading fiscal support and new U.S. tariffs.

The euro zone’s growth forecast for 2025 was revised up to 1.3% from 1.2%, supported by resilient labor markets and increased public spending in Germany. Japan’s economy is projected to grow 1.3% in 2025, up from 1.1%, before slowing to 0.9% in 2026, buoyed by strong corporate earnings and investment.

Global trade growth is expected to moderate from 4.2% in 2025 to 2.3% in 2026 due to the impact of tariffs on investment and consumption. Inflation is projected to gradually return to central bank targets by mid-2027. Most major central banks are expected to maintain or lower borrowing costs as inflation pressures ease.

Read more at Yahoo Finance: Tariffs, AI boom could test global growth’s resilience, OECD says