OECD upgrades global growth outlook
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The news: The global economy is growing faster than expected only a few months ago thanks to resilient US activity, the OECD said, upgrading its outlook.
The numbers: The Organisation for Economic Cooperation and Development now expects the global economy to match last year’s 3.1% growth rate and pick up marginally to 3.2% next year. It had forecast in February for growth of 2.9% this year and 3% in 2025.
The context: A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half of the year while also fuelling gains in consumers' incomes, the OECD said in its latest economic outlook.
The speed of recovery has diverged widely, with lingering sluggishness in Europe and Japan being offset by the US, whose growth forecast has been upgraded to 2.6% this year from a previous estimate of 2.1%. Next year US growth is expected to cool to a rate of 1.8%.
China's economy is also expected to grow faster than expected, boosted by fiscal stimulus, with growth now forecast at 4.9% in 2024 and 4.5% in 2025, up from 4.7% and 4.2% respectively in February. Eurozone growth is projected to pick up from 0.7% this year to 1.5% next year as lower inflation boosts households' purchasing power and paves the way for rate cuts, up from the previous forecast of 0.6% this year and 1.3% in 2025.
In Australia, GDP growth is projected to slow to 1.5% in 2024 before recovering to 2.2% in 2025, with the impact of higher interest rates continuing to dampen spending by households and businesses over the coming year.
