The Organization for Economic Co-operation and Development (OECD) forecasts that the U.S. will see higher-than-expected economic growth through this year, but warned that the economy is still in the midst of an slowdown.

After expanding 2.8% in 2024, the U.S. economy was forecast in June to grow just 1.6% this year, a significant slowdown in economic growth. However, thanks to a “more resilient” economy, the research organization now projects the U.S. economy will grow 1.8% this year.

Stronger growth from the Eurozone (from 1% to 1.2%) and India (from 2.1% to 2.3%) also helped brighten up the picture for the global economy, which saw its forecast upgraded. Researchers now expect 3.2% growth this year, up from the 2.9% forecast in August. That’s only a touch slower than last year’s 3.3% expansion.

However, despite cheerier spirits around the current year, the research organization warns that economic growth is still on the outs. 

The OECD warns that new U.S. tariffs will depress economic growth in 2026, both for the U.S. and global economy. They forecast they’ll grow 1.5% and 2.9% respectively next year.

As a result of new tariffs created through emergency powers by President Donald Trump, the OECD said that the overall effective U.S. tariff rate rose to nearly 20% at the end of August. It added that the effects of the highest tariffs in nearly a century are still being processed in the economy.

Some economic indicators are turning over, though, per the OECD. That could point to a bumpy 2026. In response, it expects the Fed will cut rates one more time in 2025 and twice in early 2026.

With higher tariffs already weighing on the global economy for 2026, the OECD adds that its forecast might be updated if tariff rates were to rise further. The legality of the tariffs are expected to be considered by the Supreme Court in November.