OECD lowers economic forecast for eurozone

Global gross domestic product (GDP) growth is projected to ease to 2.9 percent in 2024 from 3.1 percent in 2023, before recovering to 3.0 percent in 2025 as financial conditions ease, according to the outlook released Monday by the Organization for Economic Cooperation and Development (OECD), reported Xinhua.

Annual GDP growth in the United States would moderate to 2.1 percent in 2024 and 1.7 percent in 2025 while it's expected to remain supported by household spending and strong labor market conditions. Euro area GDP growth is projected to be 0.6 percent in 2024 and 1.3 percent in 2025, with activity held back by tight credit conditions in the near term before picking up as real incomes strengthen, the report said.

The OECD also reported global growth proved resilient in 2023, with inflation declining more quickly than anticipated; inflation was projected to be back to target in most G20 countries by the end of 2025.

"Headline inflation in the G20 economies is projected to drop from 6.6 percent in 2024 to 3.8 percent in 2025, with core inflation in the G20 advanced economies easing to 2.5 percent in 2024 and 2.1 percent in 2025," the organization added.

According to the report, high geopolitical tensions are a significant near-term risk to activity and inflation, particularly if the conflict in the Middle East were to disrupt energy markets.

Persisting service price pressures could also generate upside inflation surprises and trigger financial market repricing as expectations of monetary policy easing are reassessed.

"The foundations for future growth need to be strengthened by policy reforms," the report said, adding that enhanced international cooperation was needed to revive global trade, ensure faster and better co-ordinated progress towards decarbonization, and alleviate debt burdens in lower-income countries.

The OECD also slightly lowered its growth forecast for the eurozone as a whole to 0.6% for 2024, citing tight credit conditions, reported dpa.

For 2025, the OECD now forecasts GDP growth of 1.3% in the eurozone.

The OECD said governments are coming under increasing financial pressure due to rising public debts and expenditures.

It said greater international cooperation is needed to revive global trade, make faster and better progress with decarbonization and alleviate debt burdens in lower-income countries.