OECD lowers its forecast for global GDP growth in 2023

Global economy expected to expand by 2.9% this year, according to a Paris-based organization

The world economic growth forecast for this year was lowered to 2.9% by the Organization for Economic Cooperation and Development (OECD) on Wednesday, while it remained at 2.7% for 2024.

The OECD’s global economic outlook report from November indicated a 0.1 percentage point downward revision to the growth of the world gross domestic product (GDP).

“GDP growth has been stronger than expected so far in 2023, but is now moderating on the back of tighter financial conditions, weak trade growth and lower business and consumer confidence,” the paper stated.

In 2025, the global GDP is expected to expand by 3% as real incomes rise and inflation declines.

The Paris-based group emphasized that Asia’s rapidly expanding economies continue to be a major driver of global growth.

For both 2023 and 2024, the OECD increased its growth prediction for the US economy by 0.2 percentage points, to 2.4% and 1.5%, respectively.

The US economy is predicted to increase by 1.7% in 2025 as a result of monetary policy loosening.

China’s growth estimate was increased by 0.1 percentage points, to 5.2% for this year and 4.7% for the following. Due to ongoing strong family saving rates and pressures in the real estate sector, the Chinese economy is predicted to increase by 4.2% in 2025.

The G20 economies are predicted by the OECD to increase by 3.1% this year, 2.8% the following year, and 3% in 2025.

It is projected that Turkey’s GDP will increase by 4.5% in 2023, 2.9% in 2024, and 3.2% in 2025.

Tighter financial conditions, a gloomy outlook, and rising inflation will reduce household consumption, but investment growth will continue to be strong because of the ongoing reconstruction efforts following the February 6 earthquakes that struck 11 provinces in southern Turkey.

As borrowing cost constraints lessen, consumer price inflation in OECD countries is predicted to decline from 7.0% in 2023 to 5.2% in 2024 and 3.8% in 2025.

OECD Secretary-General Mathias Cormann stated, “We expect that inflation will be back at central bank targets by 2025 in most economies.”