Global gross domestic product (GDP) growth is projected to slow from 3.3 percent in 2024 to 3.2 percent in 2025 and to 2.9 percent in 2026, the Organization for Economic Cooperation and Development (OECD) said on Tuesday in its latest economic outlook.

According to the OECD, the downward revision from its previous forecast is due to "front-loading ceasing and higher tariff rates and still-high policy uncertainty" that dampen investment and trade.

The global growth in the first half of 2025 was more resilient than anticipated, especially in many emerging market economies. Industrial production and trade were supported by front-loading ahead of higher tariffs, the report noted.

Since May, U.S. bilateral tariff rates have increased for almost all countries. The OECD estimates that the effective U.S. tariff rate rose to 19.5 percent at the end of August, the highest level since 1933.

"The full effects of tariff increases have yet to be felt, with many changes being phased in over time and companies initially absorbing some tariff increases through (profit) margins," the OECD said.

The report cautioned that risks to the outlook remain elevated. Potential triggers for weaker growth include further tariff escalation, renewed inflationary pressures, heightened fiscal concerns, and financial market instability.

For the United States, GDP growth is forecast to decline from 2.8 percent in 2024 to 1.8 percent in 2025, and then to 1.5 percent in 2026, as strong investment in high-tech sectors is outweighed by the drag from tariffs and lower net immigration.

In the eurozone, GDP is projected to grow by 1.2 percent in 2025 and 1.0 percent in 2026. While easier credit conditions provide some support, trade frictions and geopolitical uncertainty are expected to limit momentum.

Looking ahead, the OECD emphasized that structural reforms are essential to sustainably raise living standards and fully capitalize on the benefits of emerging technologies, such as artificial intelligence.

(With input from agencies)