These expectations come as part of a slight modification to the organization’s economic forecasts for the year 2023.
In its latest report, the organization predicted that the global economy would grow 2.7 percent this year, up from 2.6 percent in its forecast in March.
The Paris-based organization added that despite the support resulting from China’s abolition of anti-coronavirus restrictions, growth will record the lowest annual rate since the global financial crisis, which occurred in 2008 and 2009, with the exception of 2020, which was hit hard by the pandemic.
The Organization for Economic Co-operation and Development said growth would then accelerate only slightly next year to 2.9 percent, unchanged from the March forecast, given the growing impact of interest rate hikes by major central banks over the past year on private investment, starting with the housing market.
“The global economy is at a turning point,” said Claire Lombardelli, the organization’s newly appointed chief economist.
According to the organization’s report, the global economy is benefiting from stagnant inflation, after the rise in indicators witnessed last year, due to the repercussions of the war in Ukraine on energy and food prices.
In May, for example, inflation slowed significantly in the euro area, reaching 6.1 percent on an annual basis, and in the United States it reached 4.4 percent in April, much lower than the levels it reached during 2022.
And this slowdown, according to the report, means that central banks can limit the rise in interest rates, which bodes well for access to credit for households and companies, consumption and thus growth.
And the recent recovery of Chinese economic activity after the strict zero Covid policy is enough to revitalize the global economy, according to the organization, which expects growth in China this year to reach 5.4 percent, an increase of 0.1 points compared to March expectations, and 5.1 percent next year.
the way is long
The Organization for Economic Co-operation and Development expects growth of 0.9 percent in the eurozone this year, up slightly by 0.1 point, after reassessing Italian GDP growth to 1.2 percent.
The growth rate in France is assumed to be 0.8 percent, and in Germany zero.
The UK could see growth of 0.3 percent this year while the Organization for Co-operation and Development was forecasting a recession.
Outside Europe, the United States’ GDP is expected to grow by 1.6 percent, and India’s by 6 percent.
Among the challenges cited by the organization is the persistence of non-energy and food inflation, which “remains high” and requires central banks to “maintain tight monetary policies until clear signs” of its decline appear, according to Lombardelli.
However, high interest rates prevent the global economy from growing more clearly, by reducing the distribution of credit and encouraging saving rather than consumption.
The report notes that “almost all countries have higher deficits and debts than before the pandemic and many are facing increasing pressures on public spending linked to aging populations, climate change and the cost burden of debt.”
In turn, the World Bank had raised its expectations for the growth of the global economy during the current year from 1.7 percent, according to its expectations issued in January, to 2.1 percent, in its latest report, “Global Economic Prospects,” compared to 3.1 percent achieved by the economy in 2021.
The bank also revised its forecast for the global economy for 2024, to 2.4 percent, compared to its previous forecast in January, which was 2.7 percent.
The World Bank said in its report that global growth has witnessed a sharp slowdown, and that the risks of financial stresses in emerging market and developing economies are intensifying amid rising global interest rates.
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