The Organisation for Economic Co-operation and Development (OECD) increased its prediction for GDP growth in the US in 2025, citing large-scale investment related to artificial intelligence as a leading cause.
The organisation, based in Paris, said Tuesday that it now anticipates annual real gross domestic product growth of 1.8% in 2025, a slight increase from its June forecast of 1.6%.
Still, the expansion is expected to slow considerably following 2024, when US GDP grew by 2.8%.
According to the OECD, growth is expected to slow to 1.5% in 2026 as the effects of both higher tariffs and lower immigration compound.
“Strong AI-related investment boosted outcomes in the United States,” the OECD said, but the benefits are being outweighed by headwinds from trade and demographic shifts.
Tariffs reach their highest level since 1933
The steep increase in tariffs is impacting heavily the US outlook.
The OECD said that the country’s overall effective tariff rate had risen to roughly 19.5% by the end of August, after the adoption of President Donald Trump’s “reciprocal” tariff policy.
The rate is the highest since 1933, according to the group’s estimations.
Higher tariffs are projected to reduce trade flows and consumer spending, limiting the positive impact of private-sector investment in high-tech industries.
The OECD also noted symptoms of a deteriorating labour market, which might limit household spending and overall economic growth.
Immigration decline adds to pressure
The OECD identified a decline in net immigration as a barrier to future US growth, in addition to tariff pressures.
Immigration has historically provided labour supply and demand, supporting workforce expansion and consumer markets.
The report suggests that reduced inflows of foreign workers and residents will exacerbate demographic challenges, potentially limiting labour supply and reducing productivity and output.
Global growth outlook more resilient
The OECD also pointed to a better-than-expected outturn for the global economy in the first half of 2025, outside the US.
It said several emerging markets were also propped up by temporary boosts from front-loading of exports to the US before the implementation of tariffs.
Consequently, the OECD raised its forecast for the rest of the world this year to 3.2%, stronger than the ongoing 2.9% expansion it thought back in June.
The revision, however, still falls short of the 3.3% growth rate in 2024.
For 2026, the organisation kept its view of 2.9% global expansion as cooling is expected following an initial lift early exports provide over against the backdrop of a gradual global spread of higher tariffs through trade networks.
Balancing AI gains with structural headwinds
The OECD’s most recent predictions highlight the multiple dynamics affecting the US outlook.
On the one hand, AI-related investment is helping to sustain growth in advanced sectors and give impetus at a time when traditional drivers like consumer demand and trade are under pressure.
On the other hand, the impact of higher tariffs and reduced immigration creates structural hurdles that may restrict the momentum’s sustainability.
While technology investment has provided a short-term boost to growth in 2025, the OECD has stated that the overall trajectory leads to a slowdown.
According to the organisation’s projections, unless policy and demographic challenges lessen, the US economy will struggle to reproduce its strong performance in 2024.
The post OECD lifts US 2025 growth outlook on AI investment, warns of tariff drag appeared first on Invezz
