OECD cuts global GDP growth projection for 2023

By Tuba Ongun

The Organization for Economic Cooperation and Development (OECD) on Wednesday cut its world economic growth projection for this year to 2.9%, but for 2024 left it unchanged at 2.7%.

World gross domestic product (GDP) growth was revised downwards by 0.1 percentage point, according to the OECD's November global economic outlook report.

"GDP growth has been stronger than expected so far in 2023, but is now moderating on the back of tighter financial conditions, weak trade growth and lower business and consumer confidence," said the report.

Global GDP is projected to grow by 3% in 2025 with inflation going down and real incomes strengthening.

The Paris-based organization stressed that global growth remains highly dependent on fast-growing Asian economies.

The OECD revised its growth forecast upwards for the US economy by 0.2 percentage points for both 2023 and 2024 to 2.4% and 1.5%, respectively.

GDP growth in the US is expected to come in at 1.7% in 2025 thanks to the easing of monetary policy.

It raised China's growth forecast by 0.1 points to 5.2% for this year and 4.7% for next year. The Chinese economy is projected to grow 4.2% in 2025 as the stresses in the real estate sector and continued high household saving rates are expected to continue.

The OECD projected G20 economies will grow 3.1% this year, 2.8% next year, and 3% in 2025.

Türkiye's GDP is foreseen to rise 4.5% in 2023, 2.9% in 2024 and 3.2% in 2025.

While household consumption will be dampened by tighter financial conditions, subdued economic sentiment, and high inflation, investment growth will remain elevated due to ongoing reconstruction activity following the earthquakes that hit 11 provinces in southern Türkiye on Feb. 6.

Consumer price inflation in OECD countries is expected to fall from 7.0% in 2023 to 5.2% in 2024 and 3.8% in 2025 as borrowing cost pressures moderate.

"We expect that inflation will be back at central bank targets by 2025 in most economies," said OECD Secretary-General Mathias Cormann.