The OECD’s latest Economic Outlook paints a picture of cautious optimism, forecasting a continuation of modest global economic growth. Projections indicate a steady rise in global GDP, with an expected growth rate of 3.1% in 2024, matching the figure for 2023, followed by a slight uptick to 3.2% in 2025. Despite the lingering effects of tight monetary conditions, particularly evident in housing and credit markets, the global economy exhibits resilience, supported by decreasing inflation rates and improved private sector confidence.
In February, the OECD unemployment rate stood at 4.9%, nearing its lowest levels since 2001. Real incomes are on the rise in many OECD countries as inflation moderates, and positive trade growth trends have emerged. However, economic prospects vary across regions, with stronger growth observed in the United States and several emerging market economies, contrasting with weaker outcomes in many advanced economies, notably in Europe.
Headline inflation across the OECD is projected to gradually ease from 6.9% in 2023 to 5.0% in 2024 and further to 3.4% in 2025. This decline is attributed to tight monetary policies and diminishing pressures from goods and energy prices. By the end of 2025, inflation is anticipated to align more closely with central bank targets across major economies.
GDP growth projections paint a nuanced picture across different regions. In the United States, GDP growth is expected to reach 2.6% in 2024, before moderating to 1.8% in 2025 due to adapting to high borrowing costs and softening domestic demand. Conversely, the euro area anticipates a rebound driven by real household income growth and accommodative monetary policy, with GDP projected at 0.7% in 2024 and 1.5% in 2025.
Japan is poised for a steady recovery, supported by stronger real wage growth and accommodative monetary measures, with GDP forecasted to expand by 0.5% in 2024 and 1.1% in 2025. Meanwhile, China is expected to experience moderate slowing, with GDP growth rates of 4.9% in 2024 and 4.5% in 2025, bolstered by fiscal stimulus and export performance.
OECD Secretary-General Mathias Cormann emphasizes the importance of policy actions to ensure macroeconomic stability and foster medium-term growth. Recommendations include maintaining prudent monetary policies, addressing fiscal pressures, and implementing reforms to enhance innovation and labor market opportunities.
While the outlook remains cautiously optimistic, risks persist, including prolonged inflationary pressures, potential disappointments in China’s growth trajectory, and geopolitical tensions. The report underscores the need for coordinated policy efforts to sustain economic resilience and promote sustainable growth in the face of evolving challenges.
