OECD forecasts global GDP growth of 2.9% in 2024

According to the interim economic review of the Organization for Economic Cooperation and Development (OECD), global GDP growth this year will slow to 2.9% y/y in 2024 from 3.1% in 2023, and then recover to 3% in 2025 as financial conditions improve. This is stated in the report of the organization.

It is expected that in 2024-2025, like last year, the bulk of global growth will be in Asia.

The forecast for eurozone GDP growth this year was revised to 0.6% y/y, and in 2025 – to 1.3% y/y (from 0.9% and 1.5% in the November 2023 review).

The OECD expects the US economy to grow by 2.1% in 2024 and 1.7% in 2025. This will be facilitated by the continued spending of savings accumulated by consumers during the pandemic and the easing of financial conditions.

The US economy is showing strength compared to Europe, where countries are struggling with tight monetary policy and shocks caused by the surge in energy prices in recent years. OECD Chief Economist Claire Lombardelli told Bloomberg Television.

«We see a mixed picture around the world. European economies are somewhat weaker due to tighter monetary conditions, in particular, due to pressure on business activity. In the United States, the picture is stronger,» she said.

China’s GDP growth is expected to reach 4.7% this year and 4.2% in 2025.

The organization predicts that inflation will continue to decline gradually due to moderate cost pressures. It is expected that core inflation in the G20 countries will decline from 6.6% this year to 3.8% next year. This figure in the G20 advanced economies will decline to 2.5% in 2024 and 2.1% in 2025.

As for the outlook, geopolitical tensions remain a key source of uncertainty. Threats to shipping in the Red Sea have led to higher transportation costs and longer delivery times for suppliers. If escalated, these factors could lead to renewed price pressures in commodity sectors and jeopardize the expected cyclical recovery. The organization estimates that a doubling of shipping costs, if it continues, will add 0.4 percentage points to consumer price inflation in OECD countries in about a year.

As GMK Center reported earlier, in its January report, the OECD warned that global steel overcapacity was growing again. This increase is expected to be as high as in 2014, at the beginning of the previous steel crisis. The gloomy outlook for steel demand and the upward shift of steel capacity from China to other regions create an alarming outlook for the coming years.