OECD says inflation is main risk for economic outlook – ISTOÉ MONEY

Supermarket in St Louis. USA

PARIS (Reuters) – The main risk to the global economic outlook is that the current bounce in inflation will prove to be longer and stronger than currently expected, the OECD said on Wednesday.

Global growth is expected to reach 5.6% this year before moderating to 4.5% in 2022 and 3.2% in 2023, the Organization for Economic Cooperation and Development (OECD) said on Wednesday in its economic scenario .

This has changed little from the previous estimate of 5.7% for 2021, while the forecast for 2022 was unchanged. It was the first time that the OECD released projections for 2023.

With the global economy recovering strongly, companies are finding it difficult to meet the return of demand from post-pandemic customers, driving up inflation around the world amid bottlenecks in global supply chains.

Like most officials, the OECD said the jump should be transitory and slow as demand and production return to normal.

“The main risk, however, is that inflation will continue to surprise upwards, forcing major central banks to tighten monetary policy earlier and with more force than projected,” the OECD said.

Provided that risk does not materialize, inflation across the OECD is likely to peak at around 5% and gradually decline to around 3% by 2023, the Paris-based organization said.

Against this backdrop, the best that central banks can do for now is to wait for supply tensions to ease and signal that they will act if necessary, the OECD said.

For the United States, the OECD projected economic growth of 5.6% this year, 3.7% in 2022 and 2.4% in 2023, against previous projections of 6.0% in 2021 and 3.9% in 2022.

The outlook for China was also less optimistic, with an expansion forecast of 8.1% in 2021 and 5.1% in both 2022 and 2023. Previously, the OECD calculated 8.5% in 2021 and 5.8% in 2022 .

But the picture is slightly better for the eurozone than expected before, with growth estimated at 5.2% in 2021, 4.3% in 2022 and 2.5% in 2023, from previous forecasts of 5.3 % in 2021 and 4.6% in 2022.

(Reporting by Leigh Thomas)