PARIS (AFP) – The Organisation for Economic Cooperation and Development (OECD) raised its global economic growth forecast for 2024 yesterday, driven by strong performances in the United States (US) and emerging countries while Europe lags behind.
The world economy is expected to expand by 3.1 per cent this year, up from a previous projection in February of 2.9 per cent, according to the OECD. “Cautious optimism has begun to take hold in the global economy, despite modest growth and the persistent shadow of geopolitical risks,” OECD Clare Lombardelli said in the quarterly report.
But Lombardelli noted that “this recovery is unfolding differently across regions”. The US economy – the world’s biggest – is now expected to expand 2.6 per cent in 2024, up from the 2.1 per cent previously expected, and faster than last year’s 2.5 per cent. The OECD also raised its forecast for the second biggest economy China, to 4.9 per cent from 4.7 per cent previously, thanks notably to an expansionary budgetary policy.
But the OECD expects timid growth of 0.7 per cent in the Eurozone, slightly better than the 0.6 per cent previously expected.
It anticipates a slight recovery to 1.5 per cent in 2025, compared to the 1.3 per cent expected in February, thanks to a recovery in domestic demand.
“The global economy has proved resilient, inflation has declined within sight of central bank targets, and risks to the outlook are becoming more balanced,” said OECD Secretary-General Mathias Cormann.
Central banks worldwide raised interest rates in efforts to combat inflation, which rose after countries emerged from COVID-19 lockdowns.
The US Federal Reserve (Fed) and the European Central Bank have frozen their rates and markets are hoping to see cuts in the coming months as inflation has eased.
But the Fed is expected to make its cuts later than previously thought due to the resilience of the US economy and an uptick in consumer prices.
The US central bank held its interest rate at a 23-year high on Wednesday, with Fed chairman Jerome Powell saying that it will “take longer than previously expected” to have confidence that inflation is on track to meet the institution’s two-per-cent target.
