In the latest Economic Outlook, OECD has slightly upgraded global growth forecasts, and stressed the need for central banks to maintain restrictive monetary policies to curtail inflation.
OECD now projects global economic expansion at 2.7%, a slight upgrade from its previous forecast of 2.6% in March. The US and China, the world’s two largest economies, saw their growth forecasts for 2023 nudged upwards by 0.1%, to 1.6% and 5.4% respectively.
In Eurozone, growth forecast was modestly bumped up by 0.1 points to 0.9%. However, Germany, the zone’s largest economy, saw a significant downgrade with zero growth now expected. UK, on the other hand, received a boost with OECD predicting 0.3% growth rather than an economic contraction. Japan’s GDP growth forecast was slightly revised down to 1.3%.
Despite the optimistic revisions, OECD chief economist Clare Lombardelli underscored the challenges ahead in a commentary accompanying the report.
“The global economy is turning a corner but faces a long road ahead to attain strong and sustainable growth,” Lombardelli stated. She added, “The recovery will be weak by past standards.”
Highlighting the ongoing inflationary pressures globally, Lombardelli advocated for a continued restrictive monetary stance from central banks. “Central banks need to maintain restrictive monetary policies until there are clear signs that underlying inflationary pressures are abating,” she urged.