The world economic prospects have improved compared to a few months agoas the inflationary shock is attenuatedbut the rise in interest rates will keep risks highdeclared the Organization for Economic Cooperation and Development (OECD) on Friday, which raised its growth forecasts for the main economies.
After growth of 3.2% last year, the world economy is on track for a 2.6% expansion by 2023 as central bank tightening takes full effect, the OECD said in its interim economic outlook.
The organization raised its forecast world growth from 2.2% of its latest Economic Outlook for Novemberciting a decrease in energy and food prices and the relaxation by China of its restrictions due to Covid-19.
Facing the next yearit is expected that the world growth accelerates to 2.9% -versus the 2.7% expected in November- as the impact of the high energy prices in household income.
Inflation
The OECD predicted that the inflation in the Group of 20 main economies would fall from 8.1% last year to 5.9% this year and I would continue decreasing to 4.5% in 2024, still well above targets of around 2%, despite interest rate hikes by many central banks.
Interest rate
The report notes that it is difficult to gauge the full impact of the rate hike and warns that increased pressure on borrowers could be translated into losses for some banksciting as an example the recent bankruptcy of the Silicon Valley Bank in United States.
Putting aside the turbulence in the financial markets after the bankruptcy of the SVB and the continuing concern about the Swiss lender Credit Suissehe European Central Bank raised rates another half percentage point on Thursday to fight inflation.
The OECD forecast that official central bank rates would peak at 5.25-5.5% in the US and 4.25% in the euro zone. and the United Kingdom, with a drop in inflation that could allow for “soft” easing next year.
Growth
The OECD predicts that the US economic growth slows from 1.5% this year to 0.9% nextsince the increase in rates cools demand. With the US labor market holding up better than expected, the forecast for this year increased from 0.5% in November and down from 1% for 2024.
Boosted by the relaxation of anti-Covid measures, the economy China will grow 5.3% this year and 4.9% in 2024compared to 4.6% and 4.1% expected in November.
The prospects for the Euro zone have also improved thanks to the fall in energy prices, and it is expected that the bloc of 20 countries register a growth of 0.8% this year and 1.5% in 2024. The OECD had previously forecast 0.5% and 1.4%, respectively.
Source: Ambito
