In brief
The OECD forecasts a dramatic reduction in growth expectations for both countries due to rising trade barriers and economic uncertainty.
Recent trade battles initiated by US President Donald Trump are likely to hit Canada and Mexico the hardest. The OECD has slashed its growth forecasts, projecting Canada to grow just 0.7% this year and next, while Mexico may plunge into recession with a projected contraction of 1.3% in 2023. Trump’s trade policies, including a 25% tariff on steel and aluminum and additional tariffs on various imports, are intensifying geopolitical uncertainty, affecting both household spending and investment. The OECD also downgraded US growth expectations to 2.2% this year, down from 2.4%. While the inflation rate, which relates to the pace of price increases, is projected to slow, the OECD anticipates it will remain elevated, expecting it to hit 3.8% across 20 major economies this year. As global trade tensions rise, the OECD issued a warning on the potential risk of further fragmentation in the world economy, which could exacerbate inflationary pressures and hinder overall growth.
