OECD Downgrades Global Growth Forecast, Swedish Economy Faces Mixed Outlook
OECD lowers global growth forecasts while Sweden's economic outlook remains cautiously optimistic.
Key Points
- • OECD forecasts global growth at 2.9% for 2025 and 2026, the lowest since 2020.
- • Sweden's economy expected to grow by 1.6% in 2025 and 2.3% in 2026.
- • Swedish growth supported by rising wages and consumption.
- • OECD criticizes Swedish economic policies, suggesting room for improvement.
The Organization for Economic Co-operation and Development (OECD) has downgraded its global growth forecast to 2.9% for both 2025 and 2026, marking the lowest growth rate since 2020. This revision reflects a broader economic uncertainty accentuated by factors such as the lingering effects of trade wars and rising protectionism that hinder trade and investment. In contrast, the report maintains a more optimistic view regarding the Swedish economy, which is projected to grow by 1.6% in 2025 and 2.3% in 2026, buoyed by increased consumption and growth in real wages.
The OECD’s forecast suggests that the global economic expansion will slow from an anticipated 3.3% in 2024, negatively impacting income and job growth in numerous countries. In its analysis, the report highlights a persisting inflationary pressure linked to service prices, which have proven challenging to manage, alongside rising food costs contributing to overall price increases. The report warns that protectionist measures, including tariffs, could further elevate inflation rates in nations heavily impacted, even as it is expected to normalize towards central bank targets by 2026.
Sweden’s expected growth could benefit from stronger real wages and an improved labor market, which are anticipated to boost household consumption. However, despite the comparatively favorable outlook for Sweden, the OECD criticized the Swedish government for its economic policies, suggesting better-targeted measures could enhance economic performance. It aligns with the country’s needs for stimulus investments and increased defense spending amid rising global tensions.
OECD Secretary General Mathias Cormann stated, "The economic landscape is clouded by uncertainty, and countries need to formulate more impactful policies to navigate these challenges effectively. The recent trends in inflation and trade must be addressed to maintain growth prospects." This reflects the consensus that while Sweden might weather the storm of the OECD’s general downturn, proactive policy reform is crucial for sustaining its economic momentum.
As the global economy grapples with these challenges, Sweden must stay vigilant and responsive to not only the forecasts but also the underlying economic indicators that could reshape its growth narrative in the coming years.