Trade risks shadowing global recovery

OECD sees global growth holding up, but tariffs and trade uncertainty cloud outlook

By Carly Fields

Global growth is expected to prove surprisingly resilient through 2027, according to the OECD, but a combination of higher energy costs, shifting tariffs and uncertainty over key trading relationships threatens to put renewed pressure on international commerce and supply chains.

The OECD’s September 2026 interim economic outlook projects world GDP growth of 2.9% this year and 3.0% in 2027. While private-sector resilience has given the economy more momentum than previously anticipated, the organisation warns that the commodity-price shock is proving more persistent than assumed. 

“Global growth has held up better than expected, but the buffers that absorbed the energy shock are being depleted,” OECD Secretary-General Mathias Cormann said. “Growth is weaker than last year and inflation is rising again.

“Governments need to target support where it is most needed and get public spending on a sustainable track. They also need to build long term growth foundations, with stronger skills, more diversified energy supplies and faster AI adoption.”

Purchasing power is expected to be squeezed as commodity prices bite and policy rates increase, although the OECD assumes an eventual resolution of the Middle East conflict will help activity recover. At the same time, artificial intelligence investment is emerging as an increasingly important pillar of global trade demand, with AI-related spending and production forecast to continue outweighing relatively weak investment elsewhere in the business sector in many G20 economies.

The projections rest on some substantial assumptions about commodity markets. The OECD uses futures pricing as of September 14, under which Brent crude reaches an average $105 a barrel in the fourth quarter of 2026 and European TTF gas €82 per megawatt hour. Prices then decline steadily, with Brent averaging $85 a barrel and TTF gas €60/MWh in 2027. Food commodity prices, however, are assumed to keep climbing into the second quarter of next year, peaking about 11% above their third-quarter 2026 level.

For traders, manufacturers and logistics operators, another assumption is that effective tariff rates remain at their mid-September levels throughout the remainder of 2026 and 2027. That effectively embeds the latest round of trade restrictions into the OECD’s baseline rather than anticipating a broad retreat from tariff barriers.

Policy ripples

The policy environment has already become markedly more restrictive. The report says continued changes to tariffs and increasing use of export restrictions on critical products are contributing to “high policy uncertainty”. New US bilateral tariffs introduced during the summer lifted the estimated effective tariff rate on US imports from 9.6% in June to 10.9% by mid-September. The OECD calculates that Brazil and India experienced the largest increases among major economies after adjusting for the share of goods subject to tariffs.

That tariff backdrop sits alongside a surprisingly resilient picture for merchandise trade flows. “Global merchandise trade recovered gradually following the initial impact of the conflict, despite rising transportation costs,” said the report. AI-related goods have been a major support, particularly for Asian economies, while trade in non-AI products has also strengthened as commodity prices increased and importing countries rebuilt inventories. Shipping indicators suggest the merchandise trade recovery was continuing into the third quarter, although traffic through the Strait of Hormuz remained at very low levels.

Korea, a major semiconductor producer, is forecast to expand by 3.7% in 2026 on the back of “strong industrial production and export growth”, before growth slows to 2.6% in 2027. Earlier in the report, the OECD notes that technology exports had provided a large boost to both Korea and Japan, with China also benefiting from the AI-related trade expansion.

North America presents a more complicated trade picture. US GDP is projected to grow by 2.2% this year and 2.1% next year, with AI investment providing support while weaker purchasing power, softer labour-force growth and depleted household savings constrain consumption. Canada is forecast at only 0.9% growth in 2026, strengthening to 1.3% next year. Although the OECD expects the narrow scope of new US tariffs on Canadian exports to limit their aggregate economic impact, it identifies a potentially broader obstacle: “Uncertainty about the future of the United States Mexico Canada agreement is likely to be a headwind to regional trade growth.”

Elsewhere, the euro area is expected to record growth of just 1.0% in both 2026 and 2027 as energy prices and higher policy rates constrain activity before their effects fade. The UK is forecast to grow 1.1% this year and 1.0% next year. China, meanwhile, is expected to slow from 5.0% growth in 2025 to 4.5% in 2026 and 4.2% in 2027, while India is forecast to expand by 7.1% in FY2026-27 and 6.5% in FY2027-28.

Concerns on inflation

Inflation remains a central threat to that outlook and to trading costs. G20 headline inflation is forecast to increase from 3.4% in 2025 to 4.1% this year before easing to 3.6% in 2027. In the US, the OECD specifically identifies “current pressures on business costs from tariffs and higher energy product prices”, even as headline inflation is projected to decline from 3.6% in 2026 to 2.6% next year.

The downside scenario illustrates why the outlook for trade-intensive businesses remains unusually fragile. Continued Middle East export disruption could create shortages of energy and specialised inputs, with net importers in Europe and Asia-Pacific among the most exposed. The OECD cautions that disruptions would spread internationally through “higher consumer prices and shortages of inputs from global supply chains”.

Yet the report also points to corporate adaptability as an important counterweight. Businesses, it says, have coped with “a succession of adverse developments in recent years, including higher trade barriers, the pick-up in inflation and rising labour shortages”, and could continue modifying operations and supply chains in response to disruption.

That resilience does not diminish the OECD’s broader message on trade policy. Its conclusion is straightforward: “Reforms to make the global trading system fairer and more resilient, while preserving the benefits of open markets, would help strengthen the prospects for sustainable and resilient growth.”