OECD hikes global GDP growth for 2024-25

By Tuba Ongun

The Organization for Economic Cooperation and Development (OECD) on Thursday revised upwards its global GDP growth forecast for 2024 and 2025.

Global economy is projected to grow by 3.1% this year and 3.2% next year, led by stronger real income growth and lower policy interest rates, according to the May Economic Outlook.

"The global economy has proved resilient, inflation has declined within sight of central bank targets, and risks to the outlook are becoming more balanced. We expect steady global growth for 2024 and 2025, though growth is projected to remain below its longer-run average," OECD Secretary-General Mathias Cormann said.

The divergence across economies continues with weaker outcomes in numerous advanced economies, especially in Europe, and strong growth in the US and several other emerging-market (EM) economies.

The GDP in the US is foreseen to increase by 2.6% in 2024 and 1.8% in 2025 as the economy adapts to high borrowing costs and moderating domestic demand.

Euro area GDP growth is projected at 0.7% this year and 1.5% next year thanks to a recovery in real household incomes, tight labor markets and reductions in policy interest rates.

The OECD expects China's GDP growth to come in at 4.9% in 2024 and 4.5% in 2025, as the economy is supported by fiscal stimulus and exports.

Headline inflation in the OECD is projected to gradually ease from 6.9% last year to 5.0% this year and 3.4% next year, helped by tight monetary policy and fading goods and energy price pressures.

The OECD projects inflation to be back on central bank targets in most major economies by the end of 2025.