The OECD raises growth forecasts for 2024, led by the US

The OECD raises growth forecasts for 2024, led by the US

PARIS, May 2, 2024 (BSS/AFP) – The OECD on Thursday raised its forecast for global growth in 2024, boosted by a dynamic recovery in the United States as the eurozone falls behind.

The Paris-based organization said global growth will now reach 3.1 percent this year, up from its previous projection of 2.9 percent in February.

“Cautious optimism is beginning to take hold in the global economy, despite modest growth and the lingering shadow of geopolitical risks,” the Organization for Economic Co-operation and Development said in its latest quarterly report.

But the report noted that “this recovery is unfolding differently across regions” and that “the mixed macroeconomic landscape is expected to persist, with inflation and interest rates falling at different rates and fiscal consolidation needs differing.”

The U.S. economy is now expected to grow 2.6 percent in 2024, up from the previously expected 2.1 percent, and faster than last year’s 2.5 percent.

Chinese growth remains even stronger, with the OECD raising its projection to 4.9 percent in 2024 from the previously expected 4.7 percent, mainly thanks to an expansionary fiscal policy.

However, the OECD predicts modest growth of only 0.7 percent in the eurozone, although this is higher than the previously expected 0.6 percent. The country expects a slight recovery to 1.5 percent in 2025, compared to the 1.3 percent expected in February, thanks to a recovery in domestic demand.

“A recovery in real household incomes, tight labor markets and policy rate cuts are expected to contribute to a gradual recovery,” the report said.

The OECD lowered its 2024 growth forecast for Germany, Europe’s largest economy, to 0.2 percent from 0.3 percent previously.

Conversely, the OECD has raised its 2024 growth forecast for France from 0.6 percent to 0.7 percent, boosted by private consumption.

In Britain, the economy is expected to grow 0.4 percent in 2024 and 1.0 percent in 2025, slower than what was expected in February, which the OECD blamed on persistent inflation.

Finally, the OECD warned that “high geopolitical tensions, especially in the Middle East, could disrupt energy and financial markets, causing inflation to rise and growth to falter.”