OECD forecasts global GDP growth of 3.2% in 2024-2025

The Organization for Economic Cooperation and Development (OECD) forecasts global GDP growth of 3.2% y/y in 2024 and 2025 due to steady trade growth, improved real incomes and looser monetary policy in many economies. This is stated in the organization’s interim economic review.

Last year, according to OECD estimates, global economic growth was 3.1%.

The organization predicts that by the end of 2025, inflation will return to central bank targets in most G20 countries. Overall inflation in the G20 economies is expected to decline to 5.4% in 2024 and 3.3% in 2025. At the same time, core inflation in the G20 advanced economies will decline to 2.7% in 2024 and 2.1% in 2025.

The OECD expects the eurozone economy to grow by 0.7% this year and 1.3% in 2025.

GDP growth in the United States is projected to slow down from its recent rapid pace, but will be smoothed out by monetary policy easing. This year it will be 2.6% and 1.6% in 2025.

China’s growth is expected to slow to 4.9% in 2024 and 4.5% in 2025. At the same time, policy incentives will be offset by low consumer demand and the ongoing deep correction in the real estate sector.

The OECD also highlighted a number of risks to the global economy. In particular, it is noted that continued geopolitical and trade tensions, including due to Russia’s war against Ukraine and the escalation of conflicts in the Middle East, could again lead to an acceleration in inflation and negatively affect global economic activity.

At the same time, rising real wages may give a stronger impetus to consumer confidence and spending, while a further decline in global oil prices will accelerate disinflation.

The weakening of inflation provides room for interest rates to ease, although monetary policy should remain cautious until inflation returns to central bank targets.

In June, the World Bank upgraded its expectations for global economic growth in 2024 to 2.6%, up from the 2.4% forecast in January. In 2025-2026, growth will accelerate to 2.7% y/y. This is significantly lower than the average level of 3.1% recorded in the decade before the COVID-19 pandemic.