The Organization for Economic Co-operation and Development on Tuesday upgraded its forecast for global growth in 2023, but lowered its outlook for economic activity next year.
The OECD forecasts global growth of 3% this year, a slowdown from last year’s 3.3% but an improvement on the group’s previous estimate of 2.7% growth. However, the OECD now predicts growth of 2.7% in 2024, up from 2.9%.
“High-frequency activity indicators in the largest economies present a mixed picture, but on balance point to a loss of momentum in the second half of 2023,” the OECD said.
Like many forecasters, the OECD was surprised by the resilience of the US and other major economies in the face of aggressive rate hikes. The US GDP forecast was raised to 2.2%, up 0.6 percentage points from the previous view.
There were also credit downgrades, particularly for Germany, where the OECD now forecasts a 0.2% deterioration, and for China, where the forecast of 5.15 growth this year equates to a credit downgrade of 0.3 percentage points.
The OECD sees the US slowing down in an election year – it now predicts growth of just 1.3% in 2024. It said tighter financial conditions will moderate pressure on demand.