OECD upgrades global growth forecast

Notes US resilience to inflation, rising anticipation for rate cuts

REUTERS May 03, 2024

Norway’s crown is under pressure, and property woes and a weakening economy have also battered Sweden’s crown, which last week hit a record low versus the euro amid a sense that rates there cannot climb much higher. PHOTO: REUTERS

PARIS:

The global economy is growing faster than expected only a few months ago thanks to resilient US activity while inflation is converging more quickly than expected with central banks’ targets, the OECD said on Thursday, upgrading its outlook.

The global economy would maintain the 3.1% growth rate seen last year and pick up marginally to 3.2% next year, the Organisation for Economic Cooperation and Development (OECD) said, upgrading forecasts dating from February for growth of 2.9% this year and 3% in 2025.

A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half of the year while also fuelling gains in consumers’ incomes, the OECD said in its latest Economic Outlook. However, the speed of recoveries diverged widely, the OECD warned, saying lingering sluggishness in Europe and Japan was being offset by the US, whose growth forecast was hiked to 2.6% this year from a previous estimate of 2.1%. Next year US growth was expected to cool to a rate of 1.8%, up slightly from 1.7% in February.

Boosted by fiscal stimulus, China’s economy was also expected to grow faster than expected with its growth now forecast at 4.9% in 2024 and 4.5% in 2025, up from 4.7% and 4.2% respectively in February. Britain’s outlook was downgraded with the OECD now forecasting only 0.4% this year.

Published in The Express Tribune, May 3^rd, 2024.

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