OECD forecasts global GDP growth at 2.9% in 2024

Anticipates moderate growth in US and eurozone

PARIS:

Global gross domestic product (GDP) growth is projected to ease to 2.9% in 2024 from 3.1% in 2023, before recovering to 3.0% in 2025 as financial conditions ease, according to the outlook released Monday by the Organisation for Economic Cooperation and Development (OECD).

Annual GDP growth in the United States would moderate to 2.1% in 2024 and 1.7% in 2025 while it’s expected to remain supported by household spending and strong labour market conditions. Euro area GDP growth is projected to be 0.6% in 2024 and 1.3% in 2025, with activity held back by tight credit conditions in the near term before picking up as real incomes strengthen, the report said.

The OECD also reported global growth proved resilient in 2023, with inflation declining more quickly than anticipated; inflation was projected to be back to target in most G20 countries by the end of 2025.

“Headline inflation in the G20 economies is projected to drop from 6.6% in 2024 to 3.8% in 2025, with core inflation in the G20 advanced economies easing to 2.5% in 2024 and 2.1% in 2025,” the organisation added.

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According to the report, high geopolitical tensions are a significant near-term risk to activity and inflation, particularly if the conflict in the Middle East were to disrupt energy markets.

Persisting service price pressures could also generate upside inflation surprises and trigger financial market repricing as expectations of monetary policy easing are reassessed.

“The foundations for future growth need to be strengthened by policy reforms,” the report said, adding that enhanced international cooperation was needed to revive global trade, ensure faster and better coordinated progress towards decarbonisation, and alleviate debt burdens in lower-income countries.

Published in The Express Tribune, February 6^th, 2024.

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