(MENAFN) The Organization for Economic Cooperation and Development (OECD) has increased its global economic growth forecasts for 2023 and 2024, according to its latest Interim Economic Outlook. The report projects that global gross domestic product will reach 2.6 percent in 2023, up from the previous forecast of 2.2 percent, while global growth is expected to hit 2.9 percent next year, slightly higher than the previous projection of 2.7 percent. However, the OECD warned that the global economic outlook still remains fragile.
The report highlights that headline inflation in the Group of 20 economies is expected to decrease from 8.1 percent in 2022 to 5.9 percent in 2023 and 4.5 percent in 2024 due to a fall in energy prices. The reopening of the Chinese economy at the end of last year has also helped ease global supply chain pressures and is likely to boost global demand moving forward, according to the OECD.
However, OECD Secretary-General Mathias Cormann stressed that the fight against inflation is not over yet, as goods inflation is receding but services inflation is proving persistent. Cormann urged central banks to continue with monetary policy tightening to get inflation back to target.
The OECD also raised its growth forecast for the Chinese economy to 5.3 percent in 2023 and 4.9 percent in 2024, as the country fully lifted COVID-19 restrictions. Japan's GDP is projected to rise 1.4 percent this year and 1.1 percent next year, compared to 1.8 percent and 0.9 percent, respectively, in the previous report.
Annual GDP growth in the US is estimated to slow to 1.5 percent in 2023 and 0.9 percent in 2024, as monetary policy moderates demand pressures, the OECD said. In the euro area, growth is projected to be 0.8 percent in 2023 but pick up to 1.5 percent in 2024, as the effects of high energy prices fade.
The OECD warned that while the global economic outlook has improved, risks remain tilted to the downside. Central bank policy rates are expected to peak at 5.25 percent-5.5 percent in the US and 4.25 percent in the euro area, according to the report.
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