OECD raises 2023 global growth outlook but cuts 2024 forecast

A stronger-than-expected US economy is helping to keep a global slowdown in check this year but a weakening Chinese economy will prove to be a bigger drag next year, the OECD forecast on Tuesday.

After expanding 3.3% last year, global GDP growth is on course to slow to 3.0% this year, the intergovernmental organisation Organisation said in the latest update of its forecasts for major economies.

While that was an upgrade from 2.7% in its June outlook, global growth is expected to slow to 2.7% in 2024 — down from its estimate of 2.9% in June.

The Paris-based body said it now expects the US GDP to grow 2.2% this year rather than the 1.6% it forecast in June as the world’s biggest economy proves more resilient than expected in the face of a series of rate hikes.

Nonetheless, it is likely to slow next year to 1.3%, though that was better than the 1.0% for 2024 expected in June.

The improved US outlook for 2023 helped offset weakness in China and the eurozone, dragged down by Germany — the only major economy expected to be in recession.

The OECD forecast that the Chinese economy would slow from 5.1% this year to 4.6% next year as momentum from the end of Covid restrictions fades and the property market struggles. In June, the OECD had forecast 5.4% growth this year and 5.1% next year.

The OECD cut the eurozone’s growth outlook this year to 0.6% from 0.9% in June, but forecast it would pick up next year to 1.1% — down from 1.5% in June — as Germany returned to growth.

Though the growth outlook for next year would mostly be weak, the OECD said central banks should keep interest rates high until clear signs inflationary pressures have subsided.

Reuters