(MENAFN) The Organization for Economic Cooperation and Development (OECD) has revised its global GDP growth forecast for both 2024 and 2025, painting a picture of cautious optimism for the global economy. According to the May Economic Outlook, the global economy is anticipated to expand by 3.1 percent this year and by a slightly stronger 3.2 percent next year. This growth trajectory is underpinned by factors such as robust real income growth and a backdrop of lower policy interest rates.
OECD Secretary-General Mathias Cormann noted that the global economy has displayed resilience, with inflation receding closer to central bank targets and a more balanced outlook for risks on the horizon. Despite this positive outlook, Cormann highlighted that growth is expected to remain below its longer-term average, reflecting ongoing challenges and uncertainties in the global economic landscape.
The OECD's projections underscore a continued divergence in economic performance across different regions, with weaker outcomes anticipated for several advanced economies, particularly in Europe. Conversely, the United States and certain emerging-market economies are poised for strong growth trajectories.
In the US, GDP growth is forecasted to reach 2.6 percent in 2024 and 1.8 percent in 2025, as the economy adjusts to factors such as elevated borrowing costs and moderating domestic demand. Meanwhile, the euro area is expected to see GDP growth of 0.7 percent this year and 1.5 percent next year, buoyed by factors such as a recovery in real household incomes and accommodative monetary policy.
China's GDP growth is projected to remain robust, with growth rates of 4.9 percent in 2024 and 4.5 percent in 2025, supported by fiscal stimulus measures and strong export performance.
On the inflation front, the OECD anticipates a gradual easing of headline inflation from 6.9 percent in the previous year to 5.0 percent in 2024 and 3.4 percent in 2025. This easing is expected to be driven by factors such as tighter monetary policy and a waning of pressures from goods and energy prices.
Overall, the OECD projects that inflation will return to central bank targets in most major economies by the end of 2025, reflecting a convergence towards more stable price dynamics over the medium term.
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