OECD Forecasts Signal Emerging Market Slowdown and Tax Policy Shifts: A Strategic Reassessment for Global Investors

The OECD's 2025 economic forecasts and policy updates paint a complex picture for emerging markets and global asset allocators. With global growth projected to decelerate and tax frameworks undergoing significant revisions, investors must recalibrate their strategies to navigate heightened risks and opportunities.

Emerging Markets Face a Dual Challenge: Tariffs and Structural Weaknesses

According to the OECD's September 2025 interim report, , with emerging markets bearing the brunt of the slowdown. The U.S. effective tariff rate,
has disrupted trade flows and front-loaded production, creating a temporary illusion of resilience in the first half of 2025. However, as these effects unwind, economies like China, Brazil, and Türkiye are projected to see growth decelerate further,
.

Inflation in emerging markets, , remains uneven. Countries such as Argentina and Türkiye are driving disinflation, but persistent services inflation and food price pressures linger as risks.
The OECD warns that rising trade barriers and policy uncertainty could exacerbate these challenges, urging governments to adopt structural reforms in competition, skills development, and digital infrastructure to mitigate long-term growth drag.

Tax Policy Shifts: A New Era of Complexity for Multinationals

The OECD's updates to the Model Tax Convention in 2025 reflect a critical shift in international tax policy.
The framework now clarifies the taxation of cross-border remote work and introduces rules for taxing income from natural resource extraction at the source. These changes aim to address gaps in a rapidly evolving global economy but will require significant administrative effort to implement,
as noted by OECD tax official .

Meanwhile, the U.S. , though dismantling the framework is not the goal.
These negotiations highlight a dynamic tax environment where corporate profitability and tax efficiency are under scrutiny. For investors, this means sectors reliant on cross-border operations-such as technology, energy, ,
prompting a reevaluation of exposure.

Strategic Repositioning: Defensive Assets and Resilient Markets

The OECD's risk assessments underscore the need for defensive asset allocation strategies. While the organization has not explicitly outlined such strategies for 2025,
its broader framework for managing offers indirect guidance. For instance, . Countries like South Korea and Israel, which have integrated advanced technologies and scenario planning into their risk management systems, may offer relative stability.

Defensive assets-such as , gold, .
The OECD's warnings . Additionally, ,
further supporting a shift toward income-generating, .

Conclusion: Navigating Uncertainty with Prudence

The OECD's 2025 forecasts and policy updates signal a world where emerging markets face both cyclical and structural headwinds. For asset allocators, the path forward lies in balancing exposure to resilient economies with a defensive tilt in portfolios. As trade barriers persist and tax frameworks evolve, investors must remain agile, leveraging OECD insights to anticipate shifts and mitigate risks.