Global growth to slow but avoid a hard landing, says OECD
THE global economy will slow slightly next year, but the risk of a hard landing has subsided despite high levels of debt and uncertainty over interest rates, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday (Nov 29).
Global growth is set to moderate from 2.9 per cent this year to 2.7 per cent in 2024, before picking up in 2025 to 3 per cent, the Paris-based policy forum said in its latest Economic Outlook.
Growth in advanced economies that make up the OECD’s 38 members is headed for a soft landing, with the United States holding up better than expected so far.
The OECD forecast US growth would slow from 2.4 per cent this year to 1.5 per cent next year, revising up its estimates from September when it predicted US growth of 2.2 per cent in 2023 and 1.3 per cent in 2024.
Though the risk of a hard landing in the United States and elsewhere had eased, the OECD said that the risk of recession is not off the table, given weak housing markets, high oil prices and sluggish lending.
China’s economy is also expected to slow as it grapples with a deflating real estate bubble and as consumers save more in the face of greater uncertainty about the outlook.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The OECD forecast the country’s growth to ease from 5.2 per cent this year to 4.7 per cent in 2024 – both marginally higher than expected in September – before slowing further in 2025 to 4.2 per cent.
In the euro area, growth is expected to pick up from 0.6 per cent this year to 0.9 per cent in 2024 and 1.1 per cent in 2025 as Germany – the region’s largest economy – emerged from a recession this year.
Nonetheless, the OECD warned that, because of the high level of bank financing in the eurozone, the full impact of interest rate hikes remains uncertain and could weigh more on growth than expected.
Meanwhile, Japan, the only major advanced economy yet to hike interest rates in the current cycle, is expected to see growth slow from 1.7 per cent this year to 1 per cent in 2024, before picking up to 1.2 per cent in 2024.
The OECD warned that, while countries’ growth outlooks are diverging, they share similar fiscal pressures, with debt burdens projected to keep rising for years to come in G7 countries. REUTERS
Share with us your feedback on BT's products and services
