The Organisation for Economic Co-operation and Development (OECD) has upgraded its outlook for the global economy, predicting it to expand by 3.1 percent this year and 3.2 percent in 2025. This positive shift is attributed to stronger-than-expected growth in both the United States and China. The OECD’s revised projections show an increase from earlier estimates, with the global economy now expected to grow at a faster pace.
Despite the overall positive outlook, the pace of recovery varies significantly across different countries. While the United States and several large emerging-market economies are experiencing strong growth, Europe and many low-income countries are facing softer outcomes. The US is expected to grow by 2.6 percent this year and 1.8 percent in 2025, while China is forecasted to expand by 4.9 percent in 2024 and 4.5 percent in 2025. On the other hand, the eurozone is projected to achieve 0.7 percent growth this year and 1.5 percent growth in 2025, and the United Kingdom’s outlook has been downgraded with growth expected to reach 0.4 percent this year and 1 percent in 2025.
The OECD noted that although the global outlook has started to improve, growth remains modest. Tighter monetary conditions continue to impact housing and credit markets, but overall global activity is proving to be relatively resilient. Inflation is falling faster than initially projected, and private sector confidence is on the rise. However, the organization acknowledged that substantial uncertainty still lingers, with tensions in the Middle East posing a significant near-term risk. Geopolitical tensions could further escalate and disrupt energy and financial markets, potentially leading to increased inflation and reduced growth.
The OECD emphasized the importance of balancing risks in the global economy. It recognized the positive signs of improvement but also highlighted the need to address ongoing uncertainties and challenges. The organization’s assessment serves as a guide for policymakers and businesses to navigate the complex economic landscape and make informed decisions to support sustainable growth and stability. By staying vigilant and responsive to changing conditions, countries can work towards fostering a more robust and resilient global economy in the years ahead.
