OECD Slashes 2025 Global Growth Forecast to 2.7% Amid Inflation and China Slowdown - Updated 2025 Analysis
The OECD has downgraded its 2025 global economic growth forecast due to persistent inflation pressures and a weaker-than-expected recovery in China, signaling ongoing challenges for worldwide markets.
Despite a surprisingly robust performance in the first half of 2023, the global economy faces headwinds as inflation remains stubbornly high and China’s economic rebound underperforms expectations, according to the Organisation for Economic Co-operation and Development's (OECD) latest Interim Economic Outlook.
Highlights to Know
- The global economy expanded at an annualized rate of 3.2% during the first half of 2023, surpassing earlier projections.
- However, the OECD has revised down its global growth forecast for 2024 to 2.7%, from 2.9% estimated in June, citing persistent inflation and a sluggish recovery in China.
- The OECD recommends that governments maintain tight monetary policies while simultaneously addressing medium-term fiscal challenges and implementing reforms to stimulate sustainable growth.
Global GDP growth for 2023 is now projected at 3%, an upward revision from the previous estimate of 2.7%, reflecting stronger-than-anticipated economic activity in early 2023. Nevertheless, the outlook for 2024 remains cautious due to ongoing inflationary pressures and uncertainties surrounding China’s economic trajectory.
Core inflation rates continue to stay elevated across many advanced economies, prompting the OECD to advise continued restrictive monetary measures until inflation is decisively reduced. In the United States, the Federal Reserve is expected to hold interest rates steady as part of its ongoing efforts to combat inflation.
Beyond monetary policy, the OECD emphasizes the importance of credible medium-term fiscal plans that account for rising future expenditure needs. Structural reforms targeting climate action and digital transformation are also critical to fostering resilient and inclusive economic growth in the coming years.
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