Global growth is stalling

Global economic growth is losing steam, and is expected to decelerate to 2.9% in 2025 and 2026, down from 3.3% in 2024, the Organization for Economic Cooperation and Development (OECD) warned in its latest Economic Outlook (pdf). The figures for this year and next would mark the first time since the pandemic that global growth would come in below 3%, the Financial Times reports.

The slowdown will be led by the world’s largest economies: US growth is forecasted to fall sharply to 1.6% in 2025 and 1.5% in 2026 from 2.8% in 2024, while China could see a slowdown from 5.0% to 4.7% and then 4.3%. In contrast, the eurozone will inch forward, with growth picking up slightly to 1.0% in 2025 and 1.2% in 2026, from just 0.8% in 2024. Despite this, “[weakened] economic prospects will be felt around the world, with almost no exception,” the OECD said.

The OECD attributed the downshift to tighter financial conditions, elevated trade barriers, and falling investment confidence. “The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” Secretary-General Mathias Cormann said in an accompanying press release.

Here at home: The OECD sees Saudi Arabia’s real GDP growing 1.8% in 2025 and 2.5% in 2026, up from 1.2% in 2024, outpacing the US, Germany, the UK, and France, while falling below average growth for G20 countries (forecasted to remain stable at 2.9% this year and next). Inflation is seen by the OECD rising slightly by 0.2 percentage points y-o-y to 1.9% in 2025, before easing to 1.8% in 2026, ranking among the top three lowest inflation rates among G20 countries.

Trump tariffs bite: The OECD cited President Donald Trump’s recently enacted tariffs as a major drag and risk for economies. The effective tariff rate has jumped from 2.5% to over 15% — the highest since WWII — and could keep US inflation elevated around 4% into 2025, the FT reports. That’s likely to delay any rate cuts from the Federal Reserve; however, policy rate cuts could follow in countries more shielded from trade tensions if inflation stays under control.

Global inflation is easing, but slowly: Inflation across G20 economies is expected to decline to 3.6% in 2025 and 3.2% in 2026. However, trade tensions could keep price pressures stubborn in some countries, although this will be tempered somewhat by lower commodity prices, the OECD said.

Trade recovery remains sluggish: Global trade growth is seen slowing to 2.8% this year and just 2.2% in 2026 — far below historical averages, the FT reports. Any further retaliatory moves in response to tariffs would also weigh on trade flows through supply chain disruptions.

What’s needed? The OECD called for renewed global cooperation to “[preserve] the economic benefits of rules-based global trade” and urged governments to enact structural reforms that could jumpstart investment, which has stagnated since the 2008 financial crisis.

MARKETS THIS MORNING-

Asian markets are firmly in the green this morning, led by South Korean markets, which are up on the back of the country electing the opposition party leader as president. The Kospi index rose to its highest level since last August, according to CNBC.

Wall Street futures indicate another day of markets opening in the red, despite consecutive days of gains buoyed by tech stocks.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.16% yesterday on turnover of SAR 3.6 bn. The index is down 10.0% YTD.

In the green: Cenomi Retail (+6.7%), Naseej (+6.1%) and SRMG (+5.9%).

In the red: UCIC (-4.0%), SHL (-3.5%) and Chemical (-3.0%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.2%yesterday on turnover of SAR 24.3 mn. The index is down 14.1% YTD.

In the green:Marble Design (+9.7%), Leaf (+9.2%) and NBM (+8.0%).

In the red: Future Care (-6.1%), Nofoth (-5.8%) and Ladun (-4.4%).

CORPORATE ACTIONS-

Almunajem Foods’ BoD approved a SAR 60 mn dividend distribution at SAR 1 per share for 1H 2025, it said in a disclosure to Tadawul. The distribution date is set for Monday, 30 June.

Al Rashid Industrial Company’s shareholders approved a SAR 10 mn dividend payout for FY 2024 at SAR 1.25 per share, according to a disclosure to Tadawul. The distribution date is set for 18 June.

Al Babtain Food Company’s shareholders approved a SAR 1.7 mn dividend payout for FY 2024 at SAR 0.5 per share, according to a disclosure to Tadawul. The distribution date is set for 22 June.