Posted on 06 Dec 2024
The global economy will likely remain resilient in the coming two years despite significant challenges, the Organization for Economic Co-operation and Development (OECD) says in its latest Economic Outlookreleased on December 4, forecasting global economic growth of 3.3% in 2025 and also 3.3% in 2026. The OECD keeps its projection for 2024 growth unchanged from the September forecast at 3.2%, while lifting that for next year from 3.2%, Mysteel Global notes.
Inflation in OECD countries is expected to ease further, from 5.4% in 2024 to 3.8% in 2025 and 3.0% in 2026, supported by the still restrictive monetary policies in force in many countries. Headline inflation has already returned to central bank targets in nearly half of the advanced economies and in close to 60% of emerging market economies, the organization said.
Labour markets have gradually eased, yet unemployment remains low by historical standards, the Outlook notes, while strong nominal wage gains and continued disinflation have bolstered real household incomes. However, private consumption growth remains subdued in most countries, reflecting weak consumer confidence. Global trade volumes are recovering, with the increase in 2024 predicted to reach 3.6%.
Specifically, growth prospects vary significantly across regions. For example, growth in the United States is projected to be 2.4% in 2025, before slowing to 2.1% in 2026. China is expected to continue to slow, with growth of 4.7% predicted in 2025 and 4.4% in 2026, the OECD report notes.
"Significant challenges remain," says OECD Secretary-General Mathias Cormann. The OECD highlights that key risks remain, including the intensification of geopolitical tensions, inflation turning out to be more persistent than anticipated, and a sharp repricing of risk in financial markets.
To navigate these challenges, the OECD emphasizes the need to durably reduce inflation, address rising fiscal pressures and tackle labour shortages to alleviate structural impediments to higher trend growth.
Growth forecast by selected economies/countries (%)
| 2024 | 2025 | 2026 |
World1 | 3.2 | 3.3 | 3.3 |
G201 | 3.3 | 3.3 | 3.2 |
OECD1 | 1.7 | 1.9 | 1.9 |
United States | 2.8 | 2.4 | 2.1 |
Euro area | 0.8 | 1.3 | 1.5 |
Japan | -0.3 | 1.5 | 0.6 |
Non-OECD1 | 4.4 | 4.4 | 4.3 |
China | 4.9 | 4.7 | 4.4 |
India2 | 6.8 | 6.9 | 6.8 |
Brazil | 3.2 | 2.3 | 1.9 |
Source: OECD
Note: 1. Moving nominal GDP weights, using purchasing power parities.
2. Fiscal year.
Source:Mysteel Global
