Economic Outlook: A Mild Slowdown In 2024 and Slightly Improved Growth in 2025
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By oecd.org
Insight | January 08, 2024
The OECD's latest Economic Outlook predicts modest global growth in 2023, with GDP growth projected at 2.9%. Asia is expected to continue accounting for the bulk of global growth in 2024-25. Consumer price inflation is expected to gradually return to central bank targets in most economies by 2025, as cost pressures moderate. The US is projected to have GDP growth of 2.4% in 2023, followed by a mild slowdown to 1.5% in 2024 and a slight improvement to 3.0% in 2025.
The euro area, which has been hit hard by Russia's war against Ukraine and the energy price shock, is projected to have GDP growth of 0.6% in 2023, rising to 0.9% in 2024 and 1.5% in 2025. China is expected to grow at a 5.2% rate this year, before growth drops to 4.7% in 2024 and 4.2% in 2025 due to ongoing stresses in the real estate sector and high household saving rates.
The outlook highlights risks, including geopolitical tensions, stronger consumer spending, and the need for stronger policies aimed at reducing inflation, reviving global trade, and adapting fiscal policy to meet long-term challenges. Policy interest rates are at or close to their peak in most economies, and monetary policy should remain restrictive until there are clear signs of inflation reduction. No rate reductions are expected in major advanced economies until well into 2024, and in some economies not before 2025.
Financial policy should prepare for long-term spending challenges, and governments must confront mounting challenges from ageing populations and climate change. Governments need to spend smarter, contain current and future fiscal pressures while preserving investment and rebuilding buffers to respond to future shocks.