OECD: Global Growth at 3.2%

The Organization for Economic Cooperation and Development (OECD) has released new estimates for the world economy, which is set to grow by 3.2% in both 2024 and 2025. This estimate is slightly higher than the previous estimate for the current year, which was 3.1% and is unchanged going forward.

At the global level, the OECD explains: “Growth has remained stable until the first half of 2024, with inflation falling, although significant risks remain. Thanks to sustained trade growth, rising real incomes, and more flexible monetary policies in many countries, the expected outlook for global growth remains at 3.2% in 2024 and 2025 (…) Inflation is projected to return to central bank targets in most G20 countries. Overall inflation in the G20 economies is expected to fall to 5.4% in 2024 and 3.3% in 2025, down from 6.1% in 2023, while core inflation in the G20 advanced economies is expected to fall to 2.7% in 2024 and 2.1% in 2025.” Thus, lower interest rates by central banks will stimulate spending in the coming months, while consumer spending will be driven by lower inflation.

In the USA, growth is expected to slow, however, monetary easing could be beneficial: thus, growth of 2.6% in 2024 and 1.6% in 2025 is expected. The euro area is forecast to grow at 0.7% in 2024. China’s economy growth will slow to 4.9% in 2024 and further to 4.5% in 2025. India is expected to grow at 6.7% in 2024 and 6.8% in 2025, while Russia is expected to grow at 3.7% in 2024 and 1.1% in 2025.

“The global economy is beginning to recover, with lower inflation and strong trade growth. With a growth rate of 3.2%, we expect global growth to remain stable in both 2024 and 2025,” explained Matthias Cormann, Secretary General of the OECD. “The decline in inflation leaves room for interest rate easing, although monetary policy should remain prudent until inflation returns to central banks’ targets.”