OECD: Global Economic Recovery Continues

G20 gross domestic product is expected to grow by 3.1% in 2024

Global GDP growth is expected to remain stable at 3.1% in 2024 and rise to 3.2% next year. This conclusion was reached by the authors of the report from the Organization for Economic Cooperation and Development (OECD) entitled “An Unfolding Recovery.” It examines the economic prospects of the world as a whole and of individual nations. The GDP of the “group of 20” most industrialized countries is expected to grow by 3.1% this year and by nearly the same amount next year. As for OECD member countries, growth should be 1.7% in 2024 and 1.8% in 2025.

OECD is an international organization known for economic research, which is mainly engaged in advisory activities, comparing policy experiences to solve common problems, describing commercial practices and coordinating local and international activities of member countries. The OECD, headquartered in Paris, currently comprises 36 countries (Australia, Austria, Belgium, Canada, Chile, Czechia, Denmark, Estonia, Finland, France, Germany, Hungary, Japan, Greece, Ireland, Iceland, Israel, Italy, Latvia, Lithuania, Luxembourg, Mexico, Norway, New Zealand, Netherlands, Poland, Portugal, Republic of Korea, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, UK, USA). It maintains links with many non-member countries, international organizations, and other international institutions.

Eurozone GDP growth, according to OECD analysts, is expected to remain fairly weak at 0.7% in 2024, before picking up to 1.5% in 2025, mainly “due to recovery in domestic demand.” According to the report, “higher wages in labor markets and rising real incomes, with lower inflation, will stimulate private consumption. Investments will benefit from the gradual easing of lending conditions and the continued disbursement of the Recovery and Sustainability Fund.”

In addition, the OECD warned that “fiscal policy will have to tighten in 2024 and 2025, with a gradual withdrawal of support measures, primarily in the energy sector.” Prudent fiscal policy is needed to restore some room for maneuver and to complement the gradual easing of monetary policy as inflation returns to its target level.” OECD experts emphasized that under the new European budget rules, “prudent fiscal policy will focus on debt sustainability and multi-year spending plans.”

In terms of individual countries’ economic development, Italy’s GDP is expected to grow by 0.7% in 2024 and another 1.2% in 2025. “High inflation over the past two years has undermined real incomes, financial conditions remain restrictive, and most of the exceptional fiscal assistance related to the covid pandemic and energy crisis has been terminated, putting pressure on private consumption and investment,” the OECD report said.

French GDP growth is also expected to slow in 2024, falling to 0.7%, before picking up again to 1.3% in 2025. Meanwhile, Germany will remain a “laggard” country in the Old Continent, with GDP growing by 0.2% in 2024 and 1.1% in 2025. According to one of the proposals that experts from the Paris-based organization voiced in Berlin, “in order to stimulate public and private investment, it is necessary to continue to reduce administrative burdens, promote digitalization within public administration, and improve the provision of infrastructure capacities, especially at the municipal level.”

The OECD estimates that Russia’s economy should grow by 2.6% in 2024 and slow to 1% in 2025. Pretty much the same is expected for US economic development: +2.6% in 2024 and +1.8% next year.

Finally, Japan’s GDP is expected to register 0.5% real gross domestic product growth this year, after which growth is expected to strengthen to 1.1% in 2025 due to a “recovery in domestic demand.” China’s economy will slow to 4.9% in 2024 and further to 4.5% in 2025.