The Organization for Economic Cooperation and Development (OECD) diagnosed that inflation is easing due to tight monetary policies in each country, but growth is slowing, including shrinking global trade.
In an economic outlook report published on the 29th (local time), the OECD said, presenting global real gross domestic product (GDP) growth rates of 2.9% and 2.7%, respectively, for this year and 2024.
Compared to last September’s forecast, this year’s growth rate fell 0.1 percentage point, and next year’s growth forecast remained the same.
The OECD explained, “Growth is slowing as the impact of austerity finance, weak trade growth, and falling confidence in businesses and consumers is growing.”
However, as real income growth recovers and policy rates begin to cut, global GDP growth is expected to rise to 3.0% in 2025.
What stands out is the gap in growth rate between countries.
The economic growth of emerging markets was generally better than that of advanced countries.
China, one of the world’s two largest economies, is expected to grow 5.2 percent this year, up from 3.0 percent last year. It is up 0.1 percentage point from last September’s forecast.
The OECD said China has been somewhat volatile since resuming economic activity earlier this year due to continued pressure from the real estate sector, but stabilized in the third quarter thanks to various support such as the government’s monetary policy easing and additional infrastructure investment.
In particular, the OECD predicted that by 2025, productivity will improve due to the end of the El Niño phenomenon and policy reforms, and the growth rate will recover to 6.5%.
The inflation rate is expected to ease steadily.
Annual consumer inflation in the G20 is expected to fall from 6.2% this year to 5.8% and 3.8% in 2024 and 2025, respectively, as cost pressures ease. In 2025, the OECD predicts that inflation targets will be met in most major countries.
However, the OECD’s diagnosis is that risks to the short-term global outlook are still inclined downward.
“If geopolitical tensions escalate due to the conflict between Hamas and Israel, energy markets and major trade routes will be significantly disrupted,” the OECD said, adding, “This could lead to further risk rebalancing in financial markets, slowing growth and stimulating inflation.”