The Organisation for Economic Cooperation and Development released its latest economic outlook on Tuesday, revealing that the global economy is displaying unexpected resilience amid Donald Trump’s tariff policies. The report challenges widespread pessimism about the severe drag that trade wars would inflict on global growth.

According to OECD’s newest projections, global economic growth for 2025 is forecast at 3.2%, slightly down from 2024’s 3.3% but notably higher than the 2.9% predicted in June. The US economy growth forecast has been upgraded to 2%, surpassing the September projection of 1.8%, while China’s growth forecast climbed to 5%, exceeding earlier estimates of 4.9%.

What’s driving this optimistic outlook? The answer lies in the explosive growth of artificial intelligence investments. The OECD points out that substantial capital expenditure by technology companies on AI infrastructure has effectively offset the negative impacts of tariff policies. According to data from Sage Advisory, global AI capital expenditure is projected to surge from over $200 billion in 2024 to nearly $400 billion in 2025, and eventually reach $600 billion by 2027. Luiz de Mello, OECD’s director of country studies, explains: “Everything that has to do with firms purchasing equipment that will allow them to thrive in this new technological age has lifted economic activity in ways that have somehow offset some of the negative impacts related to policy uncertainty and tariffs.”

Notably, without AI spending factored in, US real GDP would have contracted by 0.1%, underscoring the critical importance of these technology investments. Market performance reflects this positive sentiment—the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust tracking top 100 NASDAQ companies have advanced 15.8% and 21% this year, respectively.

On the global stage, the OECD forecasts the eurozone will expand 1.3% in 2025, modest but a significant improvement from 0.8% in 2024. India, which has emerged as the world’s fastest-growing major economy, is expected to deliver 6.7% growth this year. The OECD also expects global inflation to return to target across major economies by mid-2027.

However, the OECD sounded a cautionary note. The organization warns that further trade barrier increases or rapid policy shifts—including applying higher tariffs to broader product ranges or stricter controls on exports of critical materials like rare earth elements—could diminish growth, amplify policy uncertainty, and generate significant global supply chain disruptions.