The OECD on Wednesday raised its global growth forecast for 2023, but the lull on the inflation front and the recovery of the Chinese economy do not prevent the global economy from facing a "long road" before a sustainable recovery, it warns. Global growth is expected this year at 2.7% by the Organisation for Economic Co-operation and Development (OECD), slightly better than the 2.6% forecast in March. At 2.9%, however, global growth expected for 2024 remains unchanged, according to the report of the international institution published Wednesday, on the occasion of an annual ministerial meeting held at the Paris headquarters of the OECD.
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The global economy is turning a corner," said Clare Lombardelli, newly appointed chief economist of the institution, in the preamble of the report. The economy is benefiting from a lull in inflation, which exploded last year due to soaring energy and food prices caused by the war in Ukraine. The recent restart of the Chinese economy, after its draconian zero-Covid policy, also brings oxygen to the global economy, says the OECD. Chinese growth is expected this year at 5.4%, an increase of 0.1 point compared to the March forecast, and at 5.1% next year (+0.2 point).
Despite these positive signs, the global economy "faces a long way to go before achieving strong and sustainable growth," said British Clare Lombardelli, who took office at the OECD nearly a year after Laurence Boone left the French government. Among the challenges mentioned is the persistence of inflation excluding energy and food, which "remains stubbornly high" and requires central banks to "maintain restrictive monetary policies until there are clear signs" of calming, Lombardelli said. High interest rates prevent the global economy from growing more sharply by reducing the distribution of credit and encouraging savings rather than consumption.
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And, by increasing borrowing costs, interest rate increases also weigh heavily on the public finances of States, which have been largely degraded by the last international crises. "Almost all countries have higher deficits and debt than before the pandemic, and many are facing increasing pressures on public spending related to ageing populations, climate transition and the burden of debt costs," the OECD said in its report, which encourages governments to focus more on their fiscal support measures.
