OECD raises forecast for 2025 global growth to 3.3%

• OECD keeps 2024 growth projection stable at 3.2%
  
  
• Global trade volumes expected to grow 3.6% in 2024
  
  

Mysteel Global: The global economy will likely remain resilient in the coming two years despite significant challenges, the Organisation for Economic Co-operation and Development (OECD) stated in its latest Economic Outlook released on 4 December, forecasting growth of 3.3% both in 2025 and 2026. The OECD kept its projection for 2024 growth unchanged from the September forecast at 3.2% while lifting that for next year from 3.2%.

Inflation in OECD countries is expected to ease further, from 5.4% in 2024 to 3.8% in 2025 and 3.0% in 2026, supported by the still restrictive monetary policies in force in many countries. Headline inflation has already returned to central bank targets in nearly half of the advanced economies and in close to 60% of emerging market economies.

Labour markets have gradually eased, yet unemployment remains low by historical standards, OECD noted, while strong nominal wage gains and continued disinflation have bolstered real household incomes. However, private consumption growth remains subdued in most countries, reflecting weak consumer confidence. Global trade volumes are recovering, with the increase in 2024 predicted to reach 3.6%.

Specifically, growth prospects vary significantly across regions. For example, growth in the United States is projected to be 2.4% in 2025, before slowing to 2.1% in 2026. China is expected to continue to slow, with growth of 4.7% predicted in 2025 and 4.4% in 2026, the OECD report noted.

"Significant challenges remain," warned OECD Secretary-General Mathias Cormann. The organisation highlighted that key risks include the intensification of geopolitical tensions, inflation turning out to be more persistent than expected, and a sharp repricing of risk in financial markets.

To navigate these challenges, the OECD emphasised the need to durably reduce inflation, address rising fiscal pressures, and tackle labour shortages to alleviate structural impediments to higher trend growth.

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