Financial News: OECD Lifts 2023 Global Growth Outlook; Trims 2024

OECD Lifts 2023 Global Growth Outlook; Trims 2024 Projection

(RTTNews) - The global economy is projected to grow faster than expected this year as activity proved more resilient in the first half of the year but a sharper slowdown in China and elevated public debt are likely to weigh on next year growth, the Organisation for Economic Co-operation and Development said Tuesday.

The world economy would grow 3.0 percent this year, which was revised up from the 2.7 percent growth previously projected in June, the OECD said in its Interim Report.

Further looking ahead, global growth is seen at 2.7 percent next year, but the rate was lowered from 2.9 percent.

The projected growth is still below the normal level both in 2023 and 2024 as macroeconomic policy tightening needed to rein in inflation damp activity.

Among major economies, the yearly growth in the United States is expected to slow from 2.2 percent this year to 1.3 percent in 2024, as tighter financial conditions moderate demand pressures.

Amid subdued demand conditions, the euro area GDP growth is projected to ease to 0.6 percent in 2023, but to grow 1.1 percent in 20214 as the adverse impact of high inflation on real incomes fades.

In the case of the Chinese economy, where growth is held back by subdued domestic demand and structural stresses in property markets, it is expected to expand 5.1 percent in 2023 and 4.6 percent in 2024.

In most economies, inflation is forecast to moderate gradually over 2023 and 2024, but remain above central bank objectives, the report said.

It is to be noted that while headline inflation is declining, core inflation remains persistent in many economies due to cost pressures and high margins.

Data showed that the G20 economies are expected to experience headline inflation of 6 percent in 2023 and 4.8 percent in 2024. Core inflation is forecast to rise to 4.3 percent this year and 2.8 percent in 2024.

Structural policy efforts need to be reinvigorated to strengthen growth prospects, the OECD said in its interim September report.

The report also reiterated that reducing barriers in labor and product markets and enhancing skills development would help to boost investment, productivity and labor force participation, and make growth more inclusive.

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