economy and politics

The OECD raises its forecast for global economic growth, although it warns of fragility

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Global economic prospects have improved compared to a few months ago, as the inflationary shock eases, although risks will remain with rising interest rates, according to the OECD.

A growth in danger. After growing 3.2% last year, the world economy is poised for 2.6% expansion as central bank tightening with interest rate hikes takes effect, the Organization for Economic Development said. Cooperation and Economic Development (OECD) in its provisional economic outlook.

The organization raised its global growth forecast from 2.2% in its latest November Economic Outlook, citing a drop in soaring energy and food prices, as well as China’s easing of its Covid restrictions. -19.

For next year, the agency expects world growth to accelerate to 2.9%, compared to the 2.7% it forecast in November. Figures that are given as the impact of high energy prices on household income decreases.

The OECD affirms that inflation in the Group of 20 main economies would fall from 8.1% in 2022 to 5.9% this year, and will continue the decline to 4.5% in 2024, a figure that is still above of the objectives, despite the rises in interest rates.

In the G20 group of countries, a drop in Gross Domestic Product (GDP) is only expected this year in the United Kingdom (-0.2%) and in Russia (-2.5%).

"The impact of tightening financial conditions is likely to be felt throughout the economy over time throughout the economy, particularly on private investment"says the OECD.
“The impact of tightening financial conditions is likely to be felt across the economy over time across the economy, particularly on private investment,” says the OECD. © France 24

The recession in Russia will be much less pronounced than the one that the organization’s experts themselves predicted just over three months ago, -5.6%. This is explained because, despite Western sanctions, Moscow continues to generate through its exports, especially oil. Russian products, now with price reductions, go mostly to India and China.

According to the report, it is difficult to gauge the full impact of the rise in interest rates in the world and warns that the increase in pressure on borrowers could translate into losses for some banks, such as what happened with Silicon Valley Bank in the United States. Joined.

The OECD forecasts that the official interest rates of central banks would reach a maximum of 5.25 or 5.5% in the United States and 4.25% in the Euro Zone and the United Kingdom, with a decrease in inflation that could allow a slight easing of this next year.

For the United States, the world’s largest economy, the OECD expects economic growth to slow from 1.5% this year to 0.9% next year as rising interest rates would dampen demand.

Forecasts for the Euro Zone also improved, largely thanks to the fall in energy prices, and the bloc of 20 countries is expected to register growth of 0.8% this year and 1.5% in 2024.

With EFE and Reuters

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