The world economy is set to expand faster than previously forecast in 2025 despite trade tensions triggered by US President Donald Trump’s tariffs, the Organisation for Economic Co-operation and Development (OECD) said on Tuesday.

The Paris-based body now projects global growth of 3.2% this year, up from its June forecast of 2.9%.

It stated that the economy had “proved more resilient than anticipated” in the first half of the year, driven by strong AI-related investment in the United States, government spending in China, and the “front-loading” of imports ahead of tariff increases.

The figure remains slightly below the 3.3% growth recorded in 2024. Looking ahead, the OECD expects global expansion to slow to 2.9% in 2026 as the effects of tariffs deepen and policy uncertainty weighs on investment and trade.

Trump imposed a baseline 10% tariff on imports in April, later raising duties on dozens of countries. The OECD estimates the effective US tariff rate reached 19.5% in August – the highest since 1933.

While Washington has struck trade deals with the EU, Britain, and Japan, talks with China remain unresolved.

The OECD warned that higher tariffs could increasingly push up consumer prices, with food and energy costs also under pressure from geopolitical tensions. It also flagged risks from high public debt and financial market volatility.

Still, it said faster AI adoption or easing trade restrictions could lift growth. The OECD raised US growth to 1.8% for 2025, alongside upgrades for China (4.9%), the eurozone (1.2%), and Japan (1.1%).