The OECD expects a gradual recovery in the global economy

With inflation falling and activity holding up, despite rising interest rates, the outlook for the global economy is starting to brighten. According to forecasts from the Organization for Economic Co-operation and Development (OECD), published Thursday May 2, the increase in global gross domestic product (GDP) should reach 3.1% in 2024, at the same rate as in 2023, before to accelerate slightly, to 3.2%, in 2025.

OECD experts first note that certain economies have resisted the tightening of monetary policies better than expected. This is the case of the United States, whose growth has been “driven by the strength of household consumption and [par] a more expansionary fiscal policy than expected.” It is expected to rise to 2.6% in 2024, before slowing to 1.8% in 2025.

The large emerging economies are also showing excellent health, like India, Indonesia, Brazil and Mexico. The euro zone, on the other hand, was sluggish at the end of 2023, but, thanks to a decline in energy prices and a drop in interest rates, growth is expected to accelerate from 0.7 % in 2024 to 1.5% in 2025.

Precarious geopolitical situation

These forecasts are more uncertain than ever due to the precarious geopolitical situation in the Middle East and the evolving war in Ukraine. The OECD mentions the risk weighing on financial stability, if key interest rates decrease more slowly than expected and corporate failures continue to increase, weakening banks in the process. The organization notes that, “in some countries, notably Canada, France and the United Kingdom, the number of bankruptcies is now higher than before the pandemic” and that he “continues to increase”.

In terms of recommendations, the OECD recommends “to improve international cooperation”of ” better coordinate progress on decarbonization and help alleviate the debt burden in low-income countries”. Even if it envisages reductions in key rates from the summer in the euro zone, and at the end of the year in the United States, it estimates that the“monetary policy stance should be restrictive for some time” to ensure disinflation.

Finally, she is concerned about the increase in public debt which in OECD countries is expected to reach 117% of GDP on average by the end of 2025, compared to 75% before the global financial crisis of 2007. -2008. Among the avenues envisaged to increase tax revenue, she mentions the heritage tax and environmental taxes which, according to her, have the merit of “not to weigh on economic growth”.