Brewing trade war to weigh on global growth, OECD says

The Organization for Economic Cooperation and Development forecasts slashed its global economic growth forecast on the back of persisting inflationary pressures and the potential upheaval in trade policies brought on by US President Donald Trump’s trade war, according to the OECD’s latest economic forecast (pdf). The Paris-based organization revised down its prediction for global growth in 2025 by 0.2 percentage points to 3.1% in 2025 — down from 3.2% in 2024 — before slowing further to 3.0% in 2026.

There’s a number of factors at play: Weakening business and consumer sentiments in some countries, coupled with rising uncertainty over economic policy indicators, have collectively contributed to the lowered growth prospects for the year. Meanwhile, “higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty” are also weighing on investment and household spending.

The effects of slowed growth could appear soon: OECD sees global growth weakening in 1Q 2025, with consumer confidence having dipped early during the year, remaining “below long-run average levels despite strong growth in real incomes in many economies,” the report reads.

The big picture: GDP growth in the US is seen coming in at 2.2% in 2025 — down from a previous forecast of 2.4% growth this year — before slowing further to 1.6% in 2026. Growth in the euro area is projected to be 1.0% in 2025, down from a previous forecast of 1.3% growth, before rising to 1.2% in 2026. Meanwhile, China’s economy is expected to grow 4.8% this year, up 0.1 percentage points from the previous forecast, before slowing to 4.4% in 2026.

Inflation is also seen growing at a higher rate than previously expected, with annual headline inflation in G20 economies projected at 3.8% in 2025 and 3.2% in 2026.

And higher inflation means…: Persistent inflation could “prompt more restrictive monetary policy and could give rise to disruptive repricing in financial markets.”

THE VIEW ON SAUDI-

The OECD expects the Kingdom’s GDP to grow by 3.8% this year, up 0.2 percentage points from its previous prediction in December. Economic growth is expected to slow slightly in 2026 to 3.6%.

Inflation is expected to come in at an average of 1.9% in 2025, up from last year’s 1.7%, before accelerating to 2.0% in 2026.

How this compares to other forecasts: The IMF and the World Bank slashed Saudi Arabia’s 2025 growth projections to 3.2% and 3.4% respectively, citing extended Opec+ production cuts. Meanwhile, S&P Global sees Saudi Arabia’s GDP growing by 2.8% in 2025, while Capital Economics penciled in a more optimistic prediction of 3.5%, citing anticipated oil output cuts, “but activity in the non-oil sector is likely to soften on the back of a turn to fiscal consolidation.”

MEANWHILE- Capital Economics expects the Kingdom’s headline inflation rate to hover around 2.0% y-o-y until 4Q, before slowing back down towards the 1.0% mark. The IMF sees inflation holding steady at 1.9% and 2.0% this year and the next, while Al Rajhi Capital sees inflation remaining stable at 2.1% in 2025 before cooling slightly to 2.0% in 2026.

MARKETS THIS MORNING-

Asian markets are on the rise, tracking gains on Wall Street yesterday after US retail sales data helped ease investor concerns over a potential recession. Japan’s Nikkei and Topix are up 1.6%, while South Korea’s Kospi is up 0.6% and China’s CSI 300 gained 0.25%. Hong Kong’s Hang Seng is also up 1.9%.

Meanwhile, Wall Street futures point to another good day for US indices, with the Dow Jones up marginally and Nasdaq and S&P 500 seeing no change from yesterday.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.3% yesterday on turnover of SAR 5.5 bn. The index is down 1.3% YTD.

In the green: Entaj (+30.0%), Retal (+7.2%) and Astra Industrial (+4.5%).

In the red: Naqi (-4.3%), Arabian Shield (-3.9%) and Ardco (-3.9%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.8% yesterday on turnover of SAR 50.8 mn. The index is down 1.4% YTD.

In the green: Apico (+27.0%), AlHasoob (+9.2%) and Naba Alsaha (+7.1%).

In the red: Keir (-13.6%), Sama Water (-7.0%) and Osool and Bakheet (-5.6%).

CORPORATE ACTIONS-

Sadafco is distributing some SAR 288 mn in dividends for 2H 2024 at SAR 9.00 per share, it said in a disclosure to Tadawul. The eligibility date is set for 19 March, while distribution is scheduled for 10 April.

Alkhorayef Water and Power Technologies Company’s board also greenlit the distribution of SAR 52.5 mn in dividends for FY 2024 at SAR 1.50 a share, pending shareholders' approval at the next general assembly meeting, it said in a disclosure to Tadawul. The eligibility date will be the second trading day after the meeting, with the distribution date to be announced later.