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OECD lifts global growth forecast, driven by US
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People take pictures with “Gaia“, British artist Luke Jerram's huge floating Earth installation, in Canary Wharf in London on Jan. 20, 2023. (AFP/Daniel Leal)
T
he OECD on Thursday raised its forecast for global growth in 2024, boosted by a dynamic recovery in the United States as the eurozone lags behind.
The Paris-based organization said it now sees this year's global growth at 3.1 percent, up from its previous projection of 2.9 percent in February.
"Cautious optimism has begun to take hold in the global economy, despite modest growth and the persistent shadow of geopolitical risks," the Organisation for Economic Cooperation 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 declining at differing paces, and differing needs for fiscal consolidation."
The US economy is now expected to expand 2.6 percent in 2024, up from the 2.1 percent previously expected, 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 compared to the 4.7 percent previously expected, thanks notably to an expansionary budgetary policy.
However, the OECD sees timid growth of just 0.7 percent in the eurozone, though that is up from the 0.6 percent previously expected. It anticipates 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 reductions in policy interest rates are projected to help generate a gradual rebound," it said.
The OECD cut its 2024 growth forecast for Germany, Europe's largest economy, to 0.2 percent from 0.3 percent previously.
Conversely, the OECD raised its growth forecast for 2024 for France, increasing it to 0.7 percent from 0.6 percent, lifted by private consumption.
In Britain, the economy is seen growing 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, particularly in the Middle East, could disrupt energy and financial markets, causing inflation to spike and growth to falter".
