The OECD has improved its growth forecast for the global economy to 3.1% and the eurozone to 0.7% in 2024

This Thursday, the OECD improved its forecast for global economic growth in 2024 to 3.1%, compared with the 2.9% forecast in February, helped in particular by the dynamism of the US economic recovery, while in the eurozone it increased by 0.7 %.

“There are signs that the global outlook has begun to improve, although growth remains modest,” says an Organization for Economic Co-operation and Development (OECD) report released this Thursday, which points to marked inequalities between countries due to lower inflation, lower interest rates and a “more or less significant” need for fiscal consolidation.

The OECD expects growth to pick up slightly to 0.7% in the eurozone (up from the 0.6% previously expected), in other words, still very modest progress.

However, it expects a recovery to 1.5% in 2025 (up from 1.3% expected in previous February forecasts) thanks to a recovery in domestic demand.

“Increasing wages in tight labor markets and rising real incomes in an environment of falling inflation will stimulate private consumption,” the OECD emphasizes.

In this sense, he advocates “prudent” fiscal policy to create “fiscal room” while observing a gradual loosening of “monetary policy guidance as inflation returns to target.”

Germany, one of the region’s heavyweights, has cut its economic growth forecast to 0.2% for 2024 (previously expected 0.3%).

On the other hand, the OECD upgraded France’s growth forecast for 2024, raising it to 0.7% from the 0.6% announced in February, finding that “private consumption should strengthen” thanks to falling inflation.

In the United Kingdom, growth is expected to rise to 0.4% in 2024 and 1% in 2025, lower than estimates expected in February. This more modest recovery can be explained, in part, by persistent inflation into 2024, according to the report.

In the United States, the 2024 growth forecast has been improved to 2.6% in 2024 (from a previously expected 2.1%), following gross domestic product (GDP) growth of 2.5% last year.

Among the positive aspects, the OECD highlights the fall in inflation in 2023, which continues to decline, “albeit at a modest pace.”

Chinese economic growth is also revised upward to 4.9% in 2024 (from previously expected 4.7%), mainly due to expansionary fiscal policy.

The OECD said high geopolitical tensions continue to pose a risk to the economy in the short term, “especially as ongoing conflicts in the Middle East intensify and cause disruption in energy and financial markets, increasing inflation and slowing economic growth.”