Economic outlook: Steady global growth expected in 2024 and 2025

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Global GDP growth is expected to remain stable at 3.1% in 2024, at the same level as in 2023, then recover slightly to reach 3.2% in 2025, according to the latest edition of the OECD Economic Outlook, presented Thursday in Paris.

The impact of restrictive monetary policies continues to be felt, particularly on the housing and credit markets, but global activity appears relatively resilient, the decline in inflation continues and in the private sector, confidence is recovering, according to this new edition of the OECD’s economic outlook, presented on the sidelines of the organization’s council meeting at ministerial level.

The unemployment rate in the OECD area stood at 4.9% in February, a level close to the low points recorded since 2001 while real incomes are on the rise again in several OECD countries, against a backdrop of moderation in inflation, and trade growth has become positive again.

In the OECD area, inflation is expected to gradually decline, falling from 6.9% in 2023 to 5% in 2024 and 3.4% in 2025, thanks to the tightening of monetary policy and the easing of pressures on the prices of goods and services. energy and by the end of 2025, inflation is expected to return to central banks’ target in most major economies.

In the United States, GDP growth is expected to reach 2.6% in 2024, before slowing to 1.8% in 2025, as the economy adjusts to high borrowing costs and moderation in domestic demand.

In the euro zone, where activity stagnated in the fourth quarter of 2023, the recovery in real household incomes, tensions in labor markets and the lowering of key rates will help generate a gradual rebound. GDP growth is projected to reach 0.7% in 2024 and 1.5% in 2025.

In Japan, economic growth is expected to recover steadily, with domestic demand supported by firming real wage growth, continued accommodative monetary policy and temporary tax cuts. GDP is expected to increase by 0.5% in 2024 and by 1.1% in 2025.

In China, growth is expected to slow somewhat and GDP to increase by 4.9% in 2024 and 4.5% in 2025, with fiscal stimulus and exports supporting economic activity.

“The global economy has demonstrated resilience, inflation has fallen, approaching central bank targets, and risks to the outlook are rebalancing. We expect steady global growth in 2024 and 2025, although it is projected to remain below its long-term average,” said OECD Secretary-General Mathias Cormann.

However, considerable uncertainties remain. Inflation could remain at a high level for longer, so that key rate cuts could be slower than expected, accentuating financial vulnerabilities, warns the OECD.

In this context, the Economic Outlook proposes a series of recommendations for public authorities and underlines the need to ensure a lasting reduction in inflation, to establish a budgetary trajectory which will make it possible to cope with the growing tensions on public finances and initiate reforms likely to improve medium-term growth prospects.

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