OECD hikes global growth forecast for 2023, 2024

ANKARA

The Organization for Economic Cooperation and Development (OECD) on Friday raised its world economic growth forecasts for both 2023 and 2024, but warned that the global outlook still remains fragile.

Global gross domestic product is now projected to reach 2.6% in 2023, up from the previous forecast of 2.2%, according to the OECD’s latest Interim Economic Outlook.

Global growth is expected to hit 2.9% next year, slightly more than the previous projection of 2.7%, the report said.

Headline inflation in the Group of 20 economies is projected to decrease from 8.1% in 2022 to 5.9% in 2023 and 4.5% in 2024 due to a fall in energy prices, the Paris-based organization said.

It pointed out that the reopening of the Chinese economy at the end of last year helped ease global supply chain pressures and is likely to boost global demand moving forward.

“Headline inflation has shown signs of easing due to the fall in energy prices but, right from the outset, the global economic outlook remains fragile and risks remain tilted to the downside,” OECD Secretary-General Mathias Cormann said.​​​​​​​

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He stressed that the fight against inflation was not over yet, as goods inflation is receding but services inflation is proving persistent.

"Central banks must stay the course with monetary policy tightening to get inflation back to target," Cormann urged.

The OECD also raised its growth forecast for the Chinese economy to 5.3% in 2023 and 4.9% in 2024, as the country fully lifted COVID-19 restrictions.

Japan's GDP is projected to rise 1.4% this year and 1.1% next year, compared to 1.8% and 0.9%, respectively, in the previous report.

Annual GDP growth in the US is estimated to slow to 1.5% in 2023 and 0.9% in 2024, as monetary policy moderates demand pressures, the OECD said.

In the euro area, growth is projected to be 0.8% in 2023 but pick up to 1.5% in 2024, as the effects of high energy prices fade.

Central bank policy rates are expected to peak at 5.25%-5.5% in the US and 4.25% in the euro area, it added.