OECD: Global economic growth rate will stabilize at 3.2% this year
The Organisation for Economic Co-operation and Development (OECD) expects the global economic growth rate to stabilize at 3.2% in 2023. With the weakening effect of central bank interest rate hikes and declining inflation, household incomes are increasing, and global economic growth is in a stabilizing phase. The organization has slightly raised its economic growth forecast for 2024 to 3.2%. It is expected that the U.S. economic growth will slow down from 2.6% in 2023 to 1.6% in 2025, while the Eurozone's economic growth rate will increase from 0.7% to 1.3%. The economic outlook for the UK has also been revised upwards, with growth expected to reach 1.1% in 2024
According to the latest report from the Organization for Economic Cooperation and Development (OECD) obtained by Zhitong Finance APP, the global economic growth is stabilizing as the drag effects of central bank rate hikes fade and declining inflation boosts household income. As a result, the organization has slightly raised its economic growth forecast for this year. The OECD expects the global economy to grow by 3.2% this year and next, up slightly from the previous forecast of 3.1% for 2024, while the forecast for 2025 remains unchanged.
In its latest Economic Outlook report, the OECD stated that as the lagged effects of central bank tightening policies gradually dissipate, rate cuts will stimulate future spending, and declining inflation will benefit consumer spending.
The organization mentioned that if the recent downward trend in oil prices continues, global overall inflation rates in the coming year may be 0.5 percentage points lower than expected.
With inflation gradually approaching central bank targets, the OECD predicts that by the end of 2025, the main interest rate of the Federal Reserve will decrease from the current 4.75%-5% to 3.5%, and the European Central Bank will also decrease from the current 3.5% to 2.25%.
The OECD forecasts that U.S. economic growth will slow from 2.6% this year to 1.6% in 2025, but rate cuts will help alleviate the economic slowdown. The organization has revised down its forecast for U.S. economic growth in 2025 from 1.8% in May.
The Eurozone will help offset the impact of slowing growth in the world's two largest economies next year. Due to income growth outpacing inflation, the economic growth rate of the Eurozone's 20 countries is expected to double from 0.7% this year to 1.3%.
Against the backdrop of high wage growth, the OECD has raised its expectations for the UK economy, forecasting growth of 1.1% in 2024 and 1.2% in 2025, higher than the forecast of 0.4% for this year and 1% for next year made in May