By Reagan Steele – Business & Economic Policy Writer,
North State Free Coast Syndicate

While global economic momentum is showing signs of fatigue, new projections from the OECD highlight a striking shift: India and Indonesia are emerging as two of the fastest-growing economies, even as major Western powers face slowing growth and rising inflation.

According to the OECD’s latest Economic Outlook, global GDP growth is expected to dip from 3.3% in 2024 to just 2.9% in 2025 and 2026. The most significant slowdowns are projected in the United States, Canada, Mexico, and China, where trade pressures and financial tightening are taking their toll.

In the U.S., growth is forecast to fall from 2.8% in 2024 to 1.6% in 2025, with inflation remaining a concern for households already stretched thin. Higher trade costs, tighter monetary policy, and fiscal constraints are creating a tougher climate for both businesses and consumers.

The eurozone fares only slightly better. Growth in the region is projected to tick upward from 0.8% to 1.0%—a modest recovery, but hardly robust.

In contrast, India and Indonesia are leading the pack. India is expected to grow by 6.3% in 2025, while Indonesia comes in strong at 5.2%, reflecting stronger investment flows, regional supply chain expansion, and an overall shift in economic momentum toward Southeast Asia.

Trade policy uncertainty is a central theme in the report. The OECD warns that ongoing fragmentation—driven by tariffs, regulatory divergence, and geopolitical risk—is weakening confidence and slowing investment worldwide.

In the United States, recent efforts by President Trump to renegotiate longstanding trade arrangements have created short-term uncertainty, though they may result in more favorable long-term outcomes. Until those agreements are finalized, temporary disruptions in the flow of goods and services may persist.

“The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” said OECD Secretary-General Mathias Cormann. “Policy uncertainty is weakening trade and investment, diminishing consumer and business confidence, and curbing growth prospects.”

Still, not all the news is bleak. The report notes that if trade tensions ease and new deals are solidified, inflation could fall faster than expected and business investment may rebound. Policymakers are urged to focus on structural reforms that improve competitiveness and productivity, particularly in regions where public investment has lagged.

As American households continue to adjust to rising costs, and policymakers navigate a delicate balance between inflation control and economic expansion, the global spotlight is shifting eastward. With India and Indonesia demonstrating strong fundamentals and steady growth, the next chapter in global economic leadership may be getting written across the Indian Ocean.

Image: Bandra-Worli Sea Link, Mumbai – photo by yatrikksheth, via Wikimedia Commons, CC BY-SA 4.0