OECD revises up global growth outlook for 2025

OECD’s global growth forecast upped to 3.2% in 2025: Global GDP is set to grow at a faster rate than previously expected, with the Organisation for Economic Co-operation and Development revising up its forecast to 3.2% from its previous 2.9% prediction, according to its Interim Economic Outlook report (pdf). Its forecast for 2026 remains at 2.9%.

The rationale: Global GDP outperformed expectations during 1H 2025, with the growth and investment in the AI sector coupled with front-loading production in anticipation of levies offsetting incoming tariff-induced headwinds. The prediction still marks a slowdown from 3.3% growth in 2024, as tariffs and a climate of uncertainty weigh on trade and investment.

Markets aren’t clear of tariffs yet, with the real effect of the levies yet to be felt and “significant risks” remaining. The hard data showing signs of tariffs effects is starting to be felt through job figures and prices after firms absorbed the initial brunt through their margins.

Sovereign yield curves have steepened in the US and France, while refinancing risks are mounting in emerging markets with heavy maturities due before 2026. Crypto assets are also surging, which OECD says increases financial stability risks. OECD data shows crypto’s market cap at USD 3.9 tn in September, up nearly 5x since 2023.

Labor markets are softening: Unemployment is edging up in the US, Canada, Germany, and France, as job vacancy ratios are falling. Nominal wage growth has slowed, though it still exceeds inflation-consistent levels in the US, Eurozone, and UK.

Disinflation has lost steam, as food inflation has once again driven up goods prices and services inflation remains sticky, offsetting easing housing costs. Headline G20 inflation is projected to fall to 2.9% in 2026 from 3.4% in 2025, though US inflation will stay above target, as tariffs push import costs into consumer prices.

On the interest rate front, central banks can cut baseline rates further following the US Federal Reserve’s cut earlier this month if inflation expectations remain under control and look set to moderate, the report said. However, the OECD urged vigilance and awareness of risks regarding inflation, adding that fiscal discipline and agility was needed to control debt levels and react to any market shocks.

MARKETS THIS MORNING-

Asian markets are a sea of red this morning, after Wall Street also suffered a losing session yesterday on remarks from Fed Chair Jerome Powell that equity values are stretched. Hong Kong’s Hang Seng and China’s CSI 300 were flat at the open. Over on Wall Street, futures point to a muted open.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.6% on Monday on turnover of SAR 5.2 bn. The index is down 9.6% YTD.

In the green: Raoom (+10.0%), Saudi Cable (+6.6%) And Alyamamah Steel (+6.1%).

In the red: Cenomi Retail (-6.3%), Masar (-2.8%) And East Pipes (-2.6%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.2% on Monday on turnover of SAR 34.7 mn. The index is down 19.6% YTD.

In the green: Jana (+15.2%), NGDC (+8.6%) and SPC (+5.7%).

In the red: Meyar (-18.6%), Shalfa (-9.7%) And Paper Home (-9.5%).

CORPORATE ACTIONS-

Saudia Dairy and Foodstuff Company’s (Sadafco) board greenlit a SAR 255.9 mn dividend payout for 1H 2025 at SAR 8 per share, it said in a disclosure to Tadawul on Monday. The payout is set for Tuesday, 14 October.