OECD: Global economy is turning the corner as inflation declines and trade growth strengthens
By Jill Dando News
The global economy is showing signs of recovery, with growth remaining resilient in the first half of 2024 and inflation on the decline, according to the OECD’s latest Interim Economic Outlook.
Projected global growth stands at 3.2% for both 2024 and 2025, following a 3.1% increase in 2023, bolstered by strong trade performance and enhanced real incomes.
Inflation rates are expected to align with central bank targets across most G20 economies by the end of 2025. Headline inflation in these nations is forecasted to decrease from 6.1% in 2023 to 5.4% in 2024, and further to 3.3% in 2025. Core inflation in advanced G20 economies is projected to ease to 2.7% in 2024 and 2.1% in 2025.
U.S. GDP growth is expected to slow to 2.6% in 2024 and 1.6% in 2025, aided by easing monetary policies.
Meanwhile, the Euro area might see growth at 0.7% in 2024, improving to 1.3% in 2025, driven by a recovery in real incomes and better credit availability.
In China, growth is projected to drop to 4.9% in 2024 and 4.5% in 2025 due to low consumer demand and a struggling real estate sector.
OECD Secretary-General Mathias Cormann emphasized the positive outlook, noting, “Declining inflation provides room for interest rate easing, but monetary policy should remain cautious.” He urged governments to focus on effective spending and structural reforms to stimulate growth.
However, the report highlighted ongoing risks, including potential financial market disruptions due to tight monetary policies and geopolitical tensions, notably the conflict in Ukraine and instability in the Middle East. On the flip side, rising real wages could bolster consumer confidence, while dropping global oil prices may further alleviate inflationary pressures.
Fiscal policy must prioritize the optimization of revenues and containment of spending growth to address high public debt levels, especially in light of aging populations and necessary investments in digital and climate initiatives.
“The pace of regulatory reforms has stalled, and it is essential for governments to renew their commitment to structural change to regain economic momentum,” stated OECD Chief Economist Álvaro Santos Pereira.
For further details, consult the full Interim Economic Outlook report online or reach out to the OECD Media Office. The OECD works with over 100 countries, aiming to enhance economic and social well-being globally.
